Circadian Rhythms are physiological cycles of organisms based on the day cycle- typically dominated by the influences of the sun/light cycle. Effectively, different parts of the body are active during specific parts of the day. This typically entails that certain enzymes are more active during the day (or night) because regulatory processes increase production of said enzymes. The regulatory processes can be something as simple as presence of sunlight to a combination with hormonal control (particularly in us humans).

In mammals, a particular set of regulatory proteins are the suspects for helping to regulate the circadian rhythm- the CRY proteins. The linked article associates these proteins with general health (i.e. functioning of the body). Basically, your body is meant to do specific things at certain times of the day such as eating, sleeping, etc.

Maintaining these activities with your circadian rhythm is suggested to be important to health. Trials with mice show all kinds of issues when they are exposed to just food at the wrong time in their day

As far as sleep, there is a particular time for us to go to sleep. However, I believe REM plays a stronger effect in determining the quality of our sleep. I was trying to find a decent article to show that waking up in the middle of deep sleep is bad and et cetera, but unfortunately I need to catch a few REM cycles myself. However, certain physiological responses of the circadian rhythm also do play a role. For example, your blood pressure raises in the morning supposedly as an attempt to help get you up.

TL;DR Circadian rhythms essentially lay out a day plan for your body. Your body is more adapt to doing certain activities during certain parts of the day. Maintaining the proper activity with the proper time of the day is indeed suggested to be responsible in the upkeep of your health- sleep included.