Even though Ymir is already dead before this story begins, he plays an important role in it – after all, the entire earth is made from blood, muscles, brains, and bones (and a few other bloody bits too). The story "The First Gods and Giants" tells how Ymir was the first conscious being to emerge from the fire and ice that whirled in Ginungagap, the in-between land. The beings that come after him, the Aesir gods (including Odin) decide that they can't begin their creation until they kill Ymir, who has always been wild and crazy, but has become totally uncontrollable in his old age.
They don't just kill him – they rip his body to bits him and make their new world from his body parts. It's like a gory kill sequence in the type of video game you mom absolutely does not want you to play. (God of War III comes to mind…)
Why read such a gross story? Good question. Symbolically speaking, the death of Ymir might represent the taming of the wild and uncontrollable forces in humans that must occur before creation can. It also represents the taming and re-shaping of the ugly and chaotic into something beautiful and orderly.
Does that symbolism make Ymir's children feel any better? Not a chance. They watch bitterly as their dad's body is torn to shreds. This murder begins the longstanding feud between the races of the giants and the Aesir gods, whose hatred for one another will continue forever.