In .NET, two objects are supposed to be equal when they both point to the same object in memory. This is also called reference equality. This is what the Equals method on System.Object implements. Reference equality works for normal .NET objects but is not adequate for persistent entities. Two persistent entities can be said to be equal if they point to the same database record. So if you have loaded two instances of same employee record then they are not equal on reference equality measures, but for NHibernate they are equal.
Equality obviously matters if you want to compare two entities. But beyond the basics, equality matters because some basic collection operations depend on equality of objects. Calling the Add or Remove methods on ICollection in order to add or remove items to/from collection, internally depends on the equality check of the item being added. This is more important during removal of an item because some kind of equality check has...