Favorites Icon (favicon.ico)
If you have a (32 x 32) pixel icon with that name, it can simply be placed in the directory where the index.html file is also placed. You could also use a (48 x 48) pixels version, but (32 x 32) pixel is native windows.
The resolution of computer screens has increased over the years so that (48 x 48) pixel icons are also all right. The computer will reduce the size so that it fits the space that it has been allocated.
Some page makers have a place in web pages where you can specify where the icon can be found. In that case, it can have a different name to "favicon.ico" and be placed in a different directory on the server.
The favorites icon is used by search engines to mark search results, bookmarks etcetera. It is not a must have, because if you do not have one that has been named in your web pages or has the default name "favicon.ico" on the server, somewhere along the line, the web browser will ask your PC or phone to give you one.
The only problem with that is, even if you never see it, the server will send a web browser or search engine an error message each time a missing "favicon.ico" is requested.
It is not known, if search engine ranking is affected by a missing favorites icon.
If in doubt, you use the one that is usually placed in the left hand corner of your web pages.
Use a Favorites Icon to give your appearance in Search Engine Results a good look