The word salawat is plural which means to send blessings. In Islamic practice, the salawat is conferring blessings upon the Prophet Muhammad (s) and his Ahl al-Bayt (as). The salawat can be said in almost any context. In all five daily obligatory prayers, one has to confer blessings upon the Prophet and His Family. The formula is as follows: 

Allahumma Sallī ʿAlā Muhammad wa Āli Muhammad 

“Oh Allah, send your blessings upon Muhammad and upon the progeny of Muhammad” 

According to all major schools of Islam, if the salawat is not said during prayer, the Islamic prayer will be considered null and void.  

There are, however, more benefits to saying the salawat in addition to having it as a necessary condition for the acceptance of prayer.  

According to one hadith from Imam Jafar al-Sadiq (as), it is said that: 

One who sends 10 Salawat on the Prophet and his family, Allah and the Angels send 100 Salawats upon him, and one who sends 100 Salawats upon the Prophet and his family, then Allah and the Angels send 1000 Salawat upon him. Have you not heard the words of Allah, Glorious and Magnified be Him, (here the Imam’s own words ends, and he recites the following verse ) “It is He who confers blessing upon you, and His angels [ask Him to do so] that He may bring you out from darknesses into the light. And ever is He, to the believers, Merciful.” (Chapter 33, verse 43) 

This hadith is quite telling as it outlines the function of the salawat. The salawat activates or establishes a celestial response whereby God and His angels send their blessings upon the one reciting it. The act of God sending His blessings upon a person is grace. As such, reciting the salawat is a means through which one acquires the grace of God. Grace refers to God's unmerited favor that He confers upon us.