Role/Purpose of ContextLoaderListener in Spring?

ContextLoaderListener is optional. Just to make a point here: you can boot up a Spring application without ever configuring ContextLoaderListener, just a basic minimum web.xml with DispatcherServlet.

Here is what it would look like:

web.xml

<?xml version="1.0" encoding="UTF-8"?>
<web-app 
    xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" 
    xmlns="http://java.sun.com/xml/ns/javaee" 
    xmlns:web="http://java.sun.com/xml/ns/javaee/web-app_2_5.xsd" 
    xsi:schemaLocation="
        http://java.sun.com/xml/ns/javaee 
        http://java.sun.com/xml/ns/javaee/web-app_2_5.xsd" 
    id="WebApp_ID" 
    version="2.5">
  <display-name>Some Minimal Webapp</display-name>
  <welcome-file-list>   
    <welcome-file>index.jsp</welcome-file>    
  </welcome-file-list>

  <servlet>
    <servlet-name>dispatcher</servlet-name>
    <servlet-class>
      org.springframework.web.servlet.DispatcherServlet
    </servlet-class>
    <load-on-startup>1</load-on-startup>
  </servlet>

  <servlet-mapping>
    <servlet-name>dispatcher</servlet-name>
    <url-pattern>*.do</url-pattern>
  </servlet-mapping>
</web-app>

Create a file called dispatcher-servlet.xml and store it under WEB-INF. Since we mentioned index.jsp in welcome list, add this file under WEB-INF.

dispatcher-servlet.xml

In the dispatcher-servlet.xml define your beans:

<?xml version="1.0" encoding="UTF-8"?>
<beans 
    xmlns="http://www.springframework.org/schema/beans"
    xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
    xmlns:p="http://www.springframework.org/schema/p"
    xmlns:context="http://www.springframework.org/schema/context"
    xsi:schemaLocation="
        http://www.springframework.org/schema/beans
        http://www.springframework.org/schema/beans/spring-beans.xsd     
        http://www.springframework.org/schema/context     
        http://www.springframework.org/schema/context/spring-context.xsd">

    <bean id="bean1">
      ...
    </bean>
    <bean id="bean2">
      ...
    </bean>         

    <context:component-scan base-package="com.example" />
    <!-- Import your other configuration files too -->
    <import resource="other-configs.xml"/>
    <import resource="some-other-config.xml"/>

    <!-- View Resolver -->
    <bean 
        id="viewResolver" 
        class="org.springframework.web.servlet.view.UrlBasedViewResolver">
      <property 
          name="viewClass" 
          value="org.springframework.web.servlet.view.JstlView" />
      <property name="prefix" value="/WEB-INF/jsp/" />
      <property name="suffix" value=".jsp" />
    </bean>
</beans>

For a simple Spring application, you don't have to define ContextLoaderListener in your web.xml; you can just put all your Spring configuration files in <servlet>:

<servlet>
    <servlet-name>hello</servlet-name>
    <servlet-class>org.springframework.web.servlet.DispatcherServlet</servlet-class>
    <init-param>
        <param-name>contextConfigLocation</param-name>
        <param-value>classpath:spring/mvc-core-config.xml, classpath:spring/business-config.xml</param-value>
    </init-param>
    <load-on-startup>1</load-on-startup>
</servlet>

For a more complex Spring application, where you have multiple DispatcherServlet defined, you can have the common Spring configuration files that are shared by all the DispatcherServlet defined in the ContextLoaderListener:

<context-param>
    <param-name>contextConfigLocation</param-name>
    <param-value>classpath:spring/common-config.xml</param-value>
</context-param>
<listener>
    <listener-class>org.springframework.web.context.ContextLoaderListener</listener-class>
</listener>

<servlet>
    <servlet-name>mvc1</servlet-name>
    <servlet-class>org.springframework.web.servlet.DispatcherServlet</servlet-class>
    <init-param>
        <param-name>contextConfigLocation</param-name>
        <param-value>classpath:spring/mvc1-config.xml</param-value>
    </init-param>
    <load-on-startup>1</load-on-startup>
</servlet>

<servlet>
    <servlet-name>mvc2</servlet-name>
    <servlet-class>org.springframework.web.servlet.DispatcherServlet</servlet-class>
    <init-param>
        <param-name>contextConfigLocation</param-name>
        <param-value>classpath:spring/mvc2-config.xmll</param-value>
    </init-param>
    <load-on-startup>1</load-on-startup>
</servlet>

Just keep in mind, ContextLoaderListener performs the actual initialization work for the root application context.

I found this article helps a lot: Spring MVC – Application Context vs Web Application Context

Your understanding is correct. The ApplicationContext is where your Spring beans live. The purpose of the ContextLoaderListener is two-fold:

1. to tie the lifecycle of the ApplicationContext to the lifecycle of the ServletContext and

2. to automate the creation of the ApplicationContext, so you don't have to write explicit code to do create it - it's a convenience function.

Another convenient thing about the ContextLoaderListener is that it creates a WebApplicationContext and provides access to the ServletContext via ServletContextAware beans and the getServletContext method.