A spotters job is to look out for the driver, tell them where all other cars are at on the track. They tell the driver where they can go (high or low) and alert them to when there is a wreck/caution on the track and try and help them get through or go around it. Since a driver's head is pretty much stationary, it makes it hard for them to look around and see this for themselves.
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A spotter watches out for the driver. He/she will tell the driver who is around them or what/who to watch out for. They are like the drivers second set of eyes. They tell them where to go on the track. They have to be very focused when the driver's in a jam, but when the driver's all alone they can take a breather.
A spotter tells the driver that there is a crash ahead, also if it is clear to pass another driver.