The /var/log/wtmp file holds records of logins and logouts. Using the last command can display the contents of this file, providing information about user logins, their source IP addresses, and logout times, which is why it's essential for understanding historical logins. Other files like /var/log/btmp and /var/log/utmp serve different purposes; /var/log/btmp keeps track of failed login attempts, and /var/log/utmp contains information about current logins.