I hear about runners who need to put more iron in their diet, but then also about toddlers overdosing. I'm wondering what purpose iron serves in carrying oxygen through the body.
This a vast topic, and sorry for the superficial nature of my answer.
Iron is an essential component of hemoglobin. Hemoglobin is a coloured pigment which binds to oxygen and carries it across the body. It binds to oxygen at a place where there is high oxygen tension (for example, lungs) and release it at a place where there is low oxygen tension (such as the tissues). Iron atoms exist as Fe2+ within the hemoglobin molecules. When oxygen is added to those atoms, they bind to the iron and this prevents the oxygen from leaving it. Oxygen only leaves the iron when it reaches the tissues. So basically you need iron to carry oxygen across the body, because iron (in hemogloobin) is the oxygen carrier.
If a person have a high oxygen requirement at the tissues (such as an athlete), then the body looks to produce more red blood cells (within which the hemoglobin recides) so that it can increase the overall oxygen carrying capacity of the blood. So in order to do that, the body needs needs more iron. So atheletes needs to take more iron because
There is a progressively increasing need for more hemoglobin
There is a need to maintain the large red blood cell mass that are already existing
RBCs die after their life span of 120 days. So there is a constant rate of RBC production and killing of them. And then there is iron loss from body in various forms. The body has a store of iron (in liver). So if there is not enough supply of iron (as in pure vegetarians who does not take proper amount of green leafy vegetables), then the body will start utilising those iron stores. When the stores are over, then the body will start exhibiting symptoms of iron deficiency. In order to solve that deficiency, various iron preparations can be prescribed, and Iron tablets are only one of them.
So as I had described, athletes may need a higher iron supply than normal people. In addition to that, there are other people too, who need higher iron input in their diet:
Pregnant women (they are prescribed iron and folic acid tablets during gestation)
Menstruating women (there is monthly blood loss, and hence iron loss)
Growing children (constantly increasing RBC mass, and other growth demands)
People with problems in iron absorption
People living in the mountains
If there is a need to supplement, that can be done using the iron preparations I was talking about. Out of all ingested iron, at most 10-20% is only absorbed. However, the beauty of the human iron metabolism is that it is strongly regulated. Body will only absorb iron if it is needed. If there is adequate iron in the body already, then the absorption mechanisms are downregulated. However, in overdose, these mechanisms are deranged and hence there will be over absorption. This occurs more commonly in pediatric age groups who accidentally consumes excess of iron tablets. In those patients the iron gets accumulated in blood (and not in the RBCs are hemoglobin) and harms the cells by various ways. The only way for body to get rid of excess iron is by loss of red blood cells. Hence iron supplementation has to be a carefully monitored procedure.
Hence iron is an absolute necessity in carrying oxygen around in the body.