Since websites are stateless ASP.NET uses this technique to store the state opf the page..
A simple example:

If you would  create a page (in ASP.NET) with some text and a button.
By default the text is set to hidden.
If a user clicks the button the visibility of the text should toggle.

At the first visits to the page, the text is hidden.
The user clicks the button and the server renders a new page where the text is visible.
You can imagine that the server has to know if the text is visible or not at the moment you click the button.
This is something that's being stored in the Viewstate and posted to the server if you click the button, so it knows if it should show the text or not.

DNN has a lot of controls to store the state of and therefore there has a lot of characters in the Viewstate

Do you need it: Yes
Can you turn it off: No

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