There are many parameters that you can set in the initialization file. Oracle documents all of them in the Oracle Server Reference Manual.
Look through the following SlideShow to learn about the most important parameters in a bit more detail:
Important Oracle Initialization Parameters
How the Initialization File works
Oracle reads the initialization file whenever you start an instance.
Any changes that you make to the initialization file afterwards will not take effect until you shut down and restart your system.
Strictly speaking, Oracle does not consider the initialization file to be part of a database.
here is why.
It is an important file though, and you want to preserve it with the same care that you do all the other files that are database files.