You turn it on in a per-app or per-field basis.
Use one of two methods:
1. Edit -> Spelling -> Check Spelling As You Type.
2. Right/control-click in a text field, choose Spelling -> Check Spelling As You Type.
Note that, sadly, still not all apps support it. For example, the Mozilla-based apps (Firefox, Camino, Thunderbird, etc.) and Microsoft apps (Word, Entourage, etc.) do not support the system-wide spell checker. Nearly all Cocoa apps support it, though.
Do you have to? No, but it's a pretty good idea.
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