What exactly can i do with Mecanim?

I have been playing about with Unity for about 6 month and am finally going to start to build a small game similar to a 3d Mario game. I have been using Blender to make all my character animation up until now and they are basic but good enough. I have seen a lot about Mecanim but don’t exactly know what it does, I have my character mapped as a humanoid and set up muscles, but my main question is do I create the animation clips through Unity Mecanim somehow or do I still use an external program for my animations then Mecanim to arrange them etc. Sorry for my ignorance just really want to know if Mecanim will improve the look and flow of my animations. Thanks

This tutorial video should answer a lot: http://video.unity3d.com/video/7362044/unity-40-mecanim-animation-tutorial

Briefly, you create your animations outside Unity (i.e., using Blender). Mecanim just applies those animations to your models, and provides some additional features like root motion and inverse kinematics (Pro only).

The advantages of Mecanim are animation retargeting (you can apply animations to models with different skeletons) and animation state machines for controlling when and how animations get played.