it is called a "yarmulke" which comes from the two Hebrew words "yore Milka", which means fear of the king - g-d, and it is worn to constantly remind us that g-d is above us wherever we go.
in Hebrew it is called kip pah, similar to a dome, or a round roof.
#1. to remind us of the god above.
#2. to create "fear" of the god above. (to have "fear" means that we should do things as if god were human. another way of saying it is giving this example:
you want to steal something, so you would look around to make sure no ones there. so you should fear god by knowing that he's there watching you, as you would with a human being).