A business plan states what the business does, who it serves, how it makes money, and what it expects financially.
What it is actually used for
Obtaining finance. Lenders and investors require one, and this is the most common reason an established business writes one.
Checking the arithmetic. Writing the numbers down exposes assumptions that are wrong. A plan that does not reach break-even at realistic volume has answered an important question before any money was committed.
Agreement between owners. Where there is more than one, a written plan surfaces differences of intent that would otherwise emerge later and more expensively.
What it contains
What the business sells and to whom. Who else serves those customers and on what basis this business is chosen. How customers are reached, and what that costs.
Financial projections: revenue, costs, break-even, and a cash flow forecast. For a lender these are the section actually read, and the assumptions behind each line matter more than the totals.
What could go wrong, and what would be done about it. Its absence reads as not having considered it.
Length
A plan for a lender follows their format. A plan for the owners is worth only as much as it is used, and a short one that is revisited beats a long one that is filed.
Keeping it current
A plan reflects what was known when it was written. Compared against actual results it becomes useful; left untouched it becomes a historical document. That comparison is budgeting.