What is this
 

What is a personal transponder(A.K.A the red square think all the pros use). What is the purpose and is it necessary on a racers car but not of the national levl.

I believe it counts the number of laps you run during a race. (correct me it I'm wrong...)

are all drivers required to have them on there car. do the drivers buy them or do the races provide them.

The personal transponder is an electric device that is powered from the RX. It is used by a AMB timing system. It counts laps and records time through a wire loop that is typically laid under the start line of a race track and sends the data to a trackside computer. A transponder is needed to race at most organized tracks. Most tracks have loners for the drivers that do not have personals. They are stored in a charging rack and are assigned based on car numbers.