Why is there Cholesterol in your cell membrane?

Cholesterol functions to immobilise the outer surface of the membrane, reducing fluidity. It makes the membrane less permeable to very small water-soluble molecules that would otherwise freely cross. It functions to separate phospholipid tails and so prevent crystallisation of the membrane.

It helps to restrict the passage of molecules. Since it is small, it can work to fit and block off water soluble molecules from diffusing into the membrane.