Performance testing:

Performance testing normally done to determine the application speed in terms of response time, throughput (bytes/sec from server), proper utilization of resources of the application/product under test. In simple terms Functional testing is done to check whether the application works as desired functionally (in terms of creativeness of results).
Where as performance testing is done to check whether the application responds at desired speed with the user who is using the application/product. So, it checks whether the user request goes to server as desired & servers responses back to user as desired(in terms of speed). To say a layman’s example for why we need performance testing at all? The answer goes like this.
If you are a customer of ‘ABC Bank’, and you will do online banking to transfer money every Monday morning and Friday evening. Monday mornings when you do this transaction, you will not face any delays in processing and you observe that the website works very fast and you finish the work in 2 mins. But the same transaction when you do on Friday evenings, it will take 10 mins for you to complete the transaction. As a layman, you do not understand why this happened you simply think that your internet connection got some problem. But the problem is in the ABC bank website. Monday mornings the no of customers who does online transactions are comparatively less that that of Friday evenings. So, the application is not able to take the load that is coming on Friday evenings. To avoid this kind of issues and there by loosing valued customers, every application needs to undergo performance testing before it is available for customers.