Stalingrad was on the way to the Caucasus oil, which Hitler needed badly. If Nazis had got there, they would have gotten enough oil to fill their machinery and the war would have lasted much longer. Of course Stalin understood this, too. Therefore, the defense of Stalingrad was utterly important. The fierce battle lasted several month and ended on January 31st, 1943 by German 6th Army capitulation. It was the largest and the bloodiest battle in the history of humanity. This was the turning point of the Great Patriotic War, and WWII in general.
Here is the short video outlining the major points.
Here is the Soviet movie about this battle, from 1949.