.htaccess trouble with CodeIgniter 2.0

[eluser]CARP[/eluser]
hi fellas
I've installed CodeIgniter 2.0 (last final release) and begun developing my app.
All went fine until I noticed my main view was not seeing well and wast not loading the css/img files.

I fought with chown and permissions for www-data/apache in my Ubuntu, until I noticed a .htaccess file in /applications folder

When I opened this file, I noticed this line:

Deny from all

Removed it, and all went great.

1) What's the purpose of that file?
2) Removing that line could mean some security risks in my app?
2.1) If the file is not recommended to be removed, how could I solve the previous trouble?

Thanks