The first thing an infant learns from being read to is that books exist, and how to hold them and turn pages in the correct direction. A child who lacks this basic skill on entering school is already at a disadvantage for learning to read, albeit only a slight disadvantage.
Later, children learn how to hold books right side up, and if the parent has diligently held his/her finger under the words being read, the child will understand that those funny little black marks represent words or sentences. This second is a basic concept that some children have a hard time learning.
Finally, remember that children can understand language that is far more complext than they can speak or read to themselves. Language use follows behind language understanding. Therefore, if you read to a child, using books that are more complex in style than the child's everyday speech, you will expand the child's passive vocabulary and ability to understand complex syntax, not to mention ideas that are out of the child's daily experience. For example, most children today don't grow up on farms. However, the child who is read to a lot will probably understand a lot about farms and sheep and so forth.
How do these skills relate to reading? Most books, even early readers, assume a certain minimal vocabulary and assume familiarity with certain concepts, such as "cow" and "farm". The child who is not familiar with these concepts may find it discouraging to read, even though the child may be able to decode words successfully. Decoding is the first stage of reading (and a necessary one). Understanding, however, is necessary too, and is what makes reading rewarding.
The child who is not read to at home will probably lack exposure to a wider vocabulary, syntax and set of ideas. Reading is not, of course, the only way to attain these specific goals. Parents who tell stories and speak to their children with a more adult range of vocabulary, etc., are imparting these same language skills. But for most parents, reading is far and away the easier way to go.
Now, these language skills will not, by themselves, create good and avid readers. But if your child lacks these skills, it is far less likely (although not impossible) that your child will become a good reader. Likewise, even if your child, for whatever reason, never becomes a good reader, these language skills should still serve your child well.
In sum, reading aloud is ONE COMPONENT of preparation for reading. And, of course, you're better off reading aloud books and stories that are at the edge of your child's ability to understand, rather than only reading things that are easy.
There are numerous studies detailing the effects of reading aloud on the statistical child, and on the more detailed effect on the child of reading from different types of books. If you're interested, you can do a search of ERIC. Using the keywords "reading aloud" will also point you to literature that disusses the most effective ways of reading aloud (ie, with expression, from appropriate literature, and how to ask questions of your child).