can someone explain how this stopPropagation works?

I was trying to setup this "when you click outside of the element, close it" type of thing using some code I found on Stackoverflow:

$(document).click(function() {
 $('.list-to-hide').hide();
});

$('.show-list-button').click(function(event) {
 event.stopPropagation();
});

Could someone explain the later part with stopPropagation? I don't understand why it's needed.

Thanks! Matt