Our ancestors are those members of our family who have passed on, they are grandparents, great grandparents, etc. Our ancestors are those who made us to become who we are today. In this sense, you can already imagine the importance of serving and honoring those before us. If it not for them, we would not be here. One can serve those that once were here with us, and even those we did not get to meet.
Serving the Ancestors is not only essential in Vodou, but in many of the ATR's(African Traditional Religions) and many different paths. They guide, protect, and help us from where they are. They are the core of the religions that come from Africa, serving the ancestors is of great importance. In Espiritismo(Spiritism), one creates a "Boveda Espiritual" which is an altar dedicated to the ancestors which has 7 glasses of water, candles, offerings, etc.
Lighting a white candle gives the ancestors light to guide their way toward ours and giving them "progreso" advancement. They are essential in the religion, as they are to your well-being and spiritual development. The ancestors protect and guide us through our path. The ancestors are around you, they are your "corte espiritual" spiritual court, they are with you at all times.
Everyone really has their own way of serving the ancestors, for a very simple reason: Everyone is different. This also goes for the ancestors as even when they've passed they still retain their own personalities. This is something that should be taken in account when serving the ancestors. Common offerings to the ancestors consist of their favorite foods, coffee, tobacco, cigarettes, etc. For example, if your grandfather liked sweets during his time on Earth then that is what you will offer to him.
As for the altar, this can greatly differ between paths as well as the person. If you are beginning to serve them, then the best thing to do is simply set up a table with a white cloth, glass of clean water, fresh flowers(white would be best) and a white candle. Eventually, your altar will grow as you dedicate more time to it. Choose a peaceful place in the house for setting up your ancestors. When setting up the altar, this should be done respectfully and in Espiritismo we pray Catholic prayers. Such as Our Holy Father, Hail Mary, etc. Again, it all depends on the person. Give a little of your time everyday to talk to them and pray at the altar.
Remember, We stand on the shoulders of our ancestors.