The belief that G-d gave Moses an oral explanation of the Torah along with the written text is one of the foundations of Jewish faith. This oral tradition was given directly by G-d at the Revelation of Mount Sinai, and it is now preserved in the Talmud and Midrashim.
Therefore, when Jewish people speak of the Torah, they actually speak of two Torahs, which are one and the same: the Written Torah, and the Oral Torah. Both are alluded to in G-ds statement to Moses: Come up to Me to the Mountain, and I will give you... the Torah and the commandments (Exodus 24:12).
This is the explanation for the many instances where the Torah refers to details which are not included in the written text. These details allude to the Oral Tradition. For example: the Torah states You shall slaughter your cattle... as I have commanded you (Deut. 12:21), which clearly implies that there is a commandment concerning ritual slaughtering. Yet the details for ritual slaughtering are nowhere to be found in the written text... for it is an oral commandment. Similarly, complicated commandments such as tzizit (fringes - Numbers 15:38) and tefillin (phylacteries - Deut. 6:8) are instructed in the Torah, but yet no details are given... for the details were commanded within the framework of the Oral Tradition. So too, keeping the Sabbath is one of the Ten Commandments, but no details are written in the text as to how it should be kept. This is why G-d said, You shall keep the Sabbath holy, as I have commanded your fathers... (Jeremiah 17:22) - as I commanded them in the Oral Tradition.
The Jewish people depend on the Oral Tradition for the interpretation of the Torah, for the Written Tradition cannot be understood without it. In fact, as we clearly see from the examples listed above, the Written Torah could even be perceived as being defective unless it is supplemented by the Oral. Therefore, if the Oral Tradition is denied, it will lead to the denial of the Divine origins of the written text as well. For this reason, if one does not believe in the Oral Torah, it is considered that he does not accept any aspect of the Torah.
This Oral Torah was originally meant to be transmitted in every generation by word of mouth only. It was always handed down from master to student in such a way as to avoid ambiguity: if a student had any question, he would be able to ask. This is an advantage over a text which only appears in written form, which can always be misinterpreted.
Furthermore, the Oral Torah was designed by G-d to cover the infinitude of cases and situations which would arise in the course of time. It could never have been written in its entirety. This is the meaning of the verse, Of making books, there is no end (Ecc. 12:12). Instead, G-d taught Moses a set of rules through which the principles of the Torah could be applied to every possible case.
If the entire Torah had been given in writing, everyone would be able to interpret to suit his own desire. This would lead to division and discord among people who follow the Torah differently. On the other hand, the Oral Torah would require a central authority to preserve it... thus assuring the continued unity of Israel.
Many people accept the Bible as being sacred... both Jews and non-Jews. But it is the Oral Torah which distinguishes Judaism. Therefore the Oral Torah is the basis of G-ds covenant with Israel. It is the means through which all of Israel is called upon to devote their lives to G-d and His teachings.
At Mount Sinai, G-d revealed all the details of how the commandments should be observed to Moses. He also revealed many things which would not be used until much later. There is a tradition that while Moses was on Mount Sinai for forty days and nights, G-d taught him the Written Torah during the day, and the Oral Torah at night. This is how Moses was able to distinguish between day and night while with G-d.
Moses taught the Oral Torah to Aaron, his sons, and the Elders of Israel, in that order. Thus we find the verse, Moses called Aaron, his sons, and the Elders of Israel (Lev. 9:1). The laws were then taught to the entire nation and reviewed. Before his death, Moses again reviewed the Oral Torah, as it states: Moses took upon himself to expound this Torah (Deut. 1:5)