What is the role of relics in Buddhism?

I recently learned about an episode of Chinese history when relics associated to the Buddha were relocated to China and [Han Yu](http://en.wikipedia.org/wiki/Han_Yu) writes to the Chinese Emperor in a text titled "Memorial Discussing the Buddha's Bone" ([PDF](http://www.history.ubc.ca/sites/default/files/2%20Han%20Yu%20-%20Buddha 's%20Bone.pdf)), expressing his disagreement with the Emperor's decision to pay his respects to the relics. I don't quite understand the significance of this event, because I don't understand the role or significance of relics in Buddhism. What was the role or significance of relics for 9th century Chinese Buddhists and what role do relics play in contemporary Buddhism?