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$SU(2)$ is one of the most important groups in modern physics. The group is a crucial ingredient of the gauge symmetry of the standard model of particle physics and, in some sense, explains the structure of weak interactions.
In addition, the fundamental spacetime symmetry group called Lorentz group, is usually analyzed in terms of its Lie algebra. This Lie algebra can be understood as two copies of the $SU(2)$ Lie algebra. Hence, by understanding the Lie algebra of $SU(2)$, we understand almost everything about the Lorentz group. This analysis is crucial for the understanding what spin is, which is one of the most important properties of elementary particles.
Every $SU(2)$ transformation can be written as $$ g(x) = a_0(x) 1 + i a_i(x) \sigma ,$$ where $\sigma$ are the Pauli matrices. The defining conditions of $SU(2)$ are $g(x)^\dagger g(x)=1$ and $det(g(x)=1$, and thus we have $$ (a_0)^2 +a_i^2=1 , $$ which is the defining condition of $S^3$.
Source: page 23 in http://www.iop.vast.ac.vn/theor/conferences/vsop/18/files/QFT-4.pdf
This is also shown nicely at page 164 in the book Magnetic Monopoles by Shnir.
Elements of $SU(2)$ can be written as
$$ U(x) = e^{i \vec{r} \vec{\sigma} },$$
where $\vec{\sigma}=(\sigma_1,\sigma_2,\sigma_3)$ are the usual Pauli matrices and $ \vec{r} $ is a unit vector.