What is meant by cascading? Why it is necessary?

In my opinion the IT industry is notorious for generating many variations on its own terminology. To wit, I believe what you mean by "port cascading" is either "switch cascading" - also known as "stacking" - or "port trunking".

Stacking or cascading switches is used to extend the amount of ports available to a network, without having to purchase a larger switch - one just uplinks one switch to another, using one available port of each, and modern switches will auto-detect and forward traffic as needed.

Port trunking with switches is used to increase throughput between two network segments, by dedicating x number of ports to communication between the two, effectively creating a single, larger port. With newer networking cards I believe this is also becoming possible for PCs to some extent.

As for why either is necessary: switch stacking/port cascading is to increase available ports, as said; port trunking would be to increase throughput between two network segments.

Also, switches that have true interconnects available will connet the switches together at the backplane instead of a single port (port cascading). The switch backplanes have a much higher rate of throughput than just a single port. The full capability of the switch is what the backplane can handle. For example, if a 24 port gigabit switch had an 8 gigabit backplane, the aggregate of all the ports will not exceed the backplane speed at any given time. All of the ports share the same backplane.

Note about Port Trunking: You must enable Spanning Tree Protocol (STP) in order to use Port Trunking. If a Port Trunk were accidentally disabled before the physical connections were removed, the resulting network loop could bring down an entire network segment. STP will see the loop and automatically disable all but one of the previously trunked connections.