One of the major drawbacks of having general purpose computation devices is malware. Your computers are designed to manipulate and store instructions and information and they do that amazingly. Your computers, however, cannot tell who gave what instruction; they follow a set of instructions until it links to another, which they follow, ad infinitum. When someone who wants to use your computer can get their series of instructions run by your computer: that is when you got a problem.
Antivirus software is designed to detect when a bundle of bits on your computer could translate to a likely attack. The big question is how effective are each antivirus package at doing just that.
Oh is it reeaaaalllllyyy?
The firm AV-test.org tests antivirus software and assigns it with a score based on various factors. They recently published their findings for this quarter and found Microsoft Security Essentials was the second-least effective at preventing infections from occurring according to their scoring metric. Their report (PDF) shows that while Microsoft is effective at blocking recent malware it has difficulty with 0-day attacks.
Despite the ranking it should be noted that antivirus software should be just a guard looking over your shoulder monitoring what you do. Keep your computer and all programs on it that receive data up to date, be careful of what you run, and keep a minimum number of ports forwarded to your PC. Then and only then will an Antivirus package help protect you against what is left.
Lastly, if you happen to suspect that your computer has an infection: back up your data, reinstall your operating system, and enjoy a speedy virus-free computer. That method is free and more effective than hoping an Antivirus package reversed all the damage the virus did because you have no method of knowing otherwise.