It's fun for everyone involved.
It helps get them settled down.
It makes the children more likely to read to themselves, too.
It's a great excuse to sit down when you're tired in the evening.
Multiple research studies show that the time parents spend reading to children has the greatest influence on how well the children read, which in turn is one of the strongest predictors of success in school and in life.
It's family time.
It can help establish a routine.
It increases the child's attention span, vocabulary, and general background knowledge.
The time you spend reading to your children establishes the ideas that reading is important, and that the children are so important you take time from the dozens of other things you would otherwise be doing to read to them.
When should you start?
Today. Well, if you don't have kids yet, you can put it off.
There are people who say you should start while the baby is still in utero. I have my doubts about that, although it won't hurt.
There are people who say you should start as soon as the baby is born. That's getting a little more plausible. Recent studies show that children can tell the difference between the language(s) spoken in their home, and "foreign" languages by the time they are six months old. Again, it certainly can't hurt. The young baby won't understand the story line, and might or might not look at the pictures, but s/he will enjoy the sound of your voice and the time you spend paying attention to him.
I think a reasonable goal is to start a regular daily reading time when your child is about a year old - or immediately, if your child is already older than that.
When should you stop?
Not until the child (or the youngest child, if you have more than one) is at least fourteen. No, I'm not kidding. Of course the child will be able to read to herself before that, but that is no reason for you to stop reading aloud to her.
With very young children who have not yet gotten used to being read to, you may need to pick your times carefully at first - choose times when your baby/toddler is willing to sit still for a few minutes.
As soon as you can, establish a routine that fits your schedule. For many families, that means reading just before bedtime, and that can work well. The reading can help the children wind down, relax, and be ready to sleep. It makes a peaceful, cozy ending for the day, but it is not the only option. If there are two parents around, maybe one parent could read to the children while the other one puts the finishing touches on dinner, or washes dishes after dinner. If your family is in the unusual position of not needing to rush around in the morning, right after breakfast might be a good story time. Look at your schedule and see where it can fit.
A good rule of thumb is that you should read aloud at least 5 minutes a day for every year the child is old, and for older children, at least a half hour a day (the children over seven should also be reading to themselves at least a half hour a day, but that's another topic).
Find a quiet, comfortable spot where you can have a baby or toddler on your lap, and older children sitting right next to you - a roomy chair, a loveseat, or couch. On a bed will work if you have a good back-support pillow to lean against. You need good light on the book, though the rest of the room doesn't need to be light.
If possible, turn off all other noise in the house - television, radio, stereo, computer, video games, everything (well, you could experiment with a little soft music in the background if you want). Anyone in the house who isn't listening to the reading should be quiet. If you can't get rid of all the noise, at least have a closed door between the reading area and the other noises.
A few other miscellaneous issues...
When you first begin reading with your child, he may not want to sit still very long. This problem will usually gradually diminish as he gets older and gets used to the routine (and gets interested in the stories). For very wiggly children, you could try breaking the reading time into two or three sessions instead of one long one. You could try giving the child a "stress ball" or some silly putty to squeeze and play with while you read. It is preferable to have the child completely focused on the book and the reading, but some children do listen well while doodling or drawing - or riding a stationary bike, or walking on a treadmill.
Some people really get into dramatic storytelling, doing different "voices" for different characters. If you like doing that, go for it. Younger children, especially, will enjoy it. However, don't feel that you must be a great storyteller.