Because FM changes frequency instead of amplitude, it is less susceptible to many types of interference (like noise from power lines, static, atmospheric disturbance). Also, FM usually has more bandwidth (allowing higher fidelity, stereo, etc.). AM’s amplitude changes are easily distorted or interfered with.
AM signals use lower frequencies (longer wavelengths), which can diffract (bend) around hills/buildings and reflect off the ionosphere (especially at night). This allows AM signals to cover greater distances. FM uses higher frequency (shorter wavelengths), mostly line-of-sight, so obstacles and curvature of Earth limit range.
Modulation is the process of varying some characteristic of the carrier wave (amplitude, frequency, phase, etc.) to encode (carry) the information (audio, data). Without modulation, you can’t efficiently transmit sound or other information over long distances.
