We interrupt this teardown for a Science Party. Dim the lights, fire up the smoke machine, and bring the laser beams!

So when you put it all together, what does a lens in a VR headset actually do?

For the VR experience to be realistic and not cause great discomfort, you need the optics to do two things: magnify the display so that you can't see the edges (which would kill the immersion), and focus the display at optical infinity.

That last one is a fancy optics term that means objects on the display have to appear far away. The lens realigns the incoming light into parallel rays, so you don't have to do any work to focus, preventing eye strain.

TL;DR: The Rift's lenses make up for your eyes' and the displays' shortcomings, making you think you're looking at an endless, distant display (instead of a TV screen glued to your face).