About the Last-Modified Header
The Last-Modified HTTP response header tells the client (browser, search engine bot) when the page was last changed. If the client received a Last-Modified header, on subsequent requests to the same URL it will send an If-Modified-Since header asking whether the page has changed since the date it received.
The server, upon receiving the If-Modified-Since request, should compare the timestamp with the actual last modification time and, if the page has not changed, respond with 304 Not Modified.
Bandwidth Savings
If the page has not changed, the server will stop transmitting data after sending the headers with 304 Not Modified. The page body, images, and other objects will not be transferred.
Reducing Server Load
Proper implementation of last modification time checking can significantly reduce server load (by 30% or more). Proper implementation means checking the time before generating the page on a dynamic site. In this case, all page generation actions (database queries, template parsing, comment loading, etc.) will not be performed.
This is especially important for high-traffic sites with long user sessions. For example, a user on a sports news site repeatedly refreshes the main page waiting for match results. Over a few minutes, the page could be requested dozens of times. If the Last-Modified header is served and If-Modified-Since is handled correctly, the page will actually be transmitted only once, and all subsequent requests will receive a 304 Not Modified response.
Faster Search Engine Indexing
Search engines recommend sending the Last-Modified header and properly handling If-Modified-Since in their webmaster guidelines.
Google: Webmaster Guidelines
Make sure your web server supports the If-Modified-Since HTTP header. This header allows your web server to tell Google whether your content has changed since it last crawled your site. Supporting this feature reduces bandwidth and overhead.