Power may be important for two reasons (at least)
[Also general ‘Green’ efficiency issues.]
The first issue is to get adequate power in to where it's needed
The second issue is to get the waste (heat) out
As devices continue to shrink their energy demand per operation reduces.
Roughly speaking:
All active circuits have some demand for electric current: this depends on their capacitive load and their switching rate. Load can be extracted from the layout; the activity factor (α) for the logic may be simply estimated or derived from activity in a ‘typical’ set of functional simulations.
The power distribution network is made of metal wires which have some inherent resistance. This means that there is a voltage drop from the supply at the pad ring to the circuit itself.
[The figure assumes the power is supplied from the chip's periphery, which is typical.]
Thus the supply voltage at the circuit will be less that the original specification. This means the circuit is operating under (slightly) different conditions from those intended.
These differences must be kept within controlled bounds for the system to work correctly. CAD tools allow the estimation of the voltage drop, taking into account the logic circuits, their activity and the power distribution wiring. This can translate into a map showing where problems may occur. The response is usually to supplement wiring to those areas although, more drastically, a different floor-plan may be required.
It is normal to use subscripts to locate particular parameters: thus ‘Vd’ is used for the voltage of the drain of a transistor.
The convention is to ‘double’ the subscript to designate the power supply to such terminals, thus ‘Vdd’ is the drain supply voltage (or ‘power’ in the vernacular). Similarly ‘Vss’ (source supply voltage) is sometimes used for the ‘low’ supply rail, although ‘ground’/‘GND’ is often interchanged.
‘Vcc’ (collector supply voltage) is still seen occasionally (and incorrectly): this is analogous to Vdd in bipolar transistor technology. (It's a left-over from a previous generation.)