Building or covering exterior walls with a material susceptible to moisture, such as wood, requires you to add extra protection to prevent damage. Without the right protection, wood siding quickly rots and falls off the wall, exposing the interior framing to damage. Metal flashing is one way to protect an exterior wall from rainfall and other sources of moisture.
Flashing is a waterproof material, often made of metal but can also be plastic or tar paper, that keeps water from entering the structure of a roof or wall. When water soaks behind the wood siding protecting your exterior walls, it causes rot in the structural framing of the wall. This leads to serious safety problems. Since the rot occurs behind the siding, you can't see the problem until it begins to spread in most cases.
Properly sealed siding that is installed with enough overlap does an effective job of keeping moisture out of the wall. A drainage plane of waterproof material known as vapor wrap or house wrap should be used underneath the siding as well. When the water reaches the bottom of the wall, there's a greater chance that it will seep past the siding and vapor wrap due to splashing or pool when it meets the ground, according to the Environmental Protection Agency. Using a layer of flashing below the siding at the base of the wall continues the drainage plane past where the siding meets the ground.
Tacking on some metal flashing over the wood siding at the base of the wall won't help. Metal flashing sheets must be sandwiched between the plywood of the exterior walls and the vapor wrap used to the form the drainage plain, says the Environmental Protection Agency. The wrap must overlap the top of the flashing. This prevents water from soaking into the interior of the wall where the sheathing meets the flashing. The wood siding should be installed over the flashing until it meets the ground.
Neglecting to add flashing to the base of a wood-sided wall won't just damage the structure of the wall. Improper drainage affects the foundation that the wall rests on as well. Water that drips down the edge of the wall and drains next to the foundation undermines the soil around it, leading to shifting that could seriously damage your home's stable base according to "Wood-Frame House Construction" by Gerald Sherwood and Robert Stroh.