Within prison, the probation system is concerned for your future outside and liasing with outside probation for your release.

The main point for the inside probation service is attempting to verify were you will be staying when released and if any concerns about it exist. The obvious concern is housing and your ability to look after yourself, as one of the precursors to re-offending behaviour is lack of monies they also look at your work/ benefit as well, to attempt to help secure your future.

The main drive is the provision of accommodation and to that end, you will be asked various questions relating to family and friends. If required the probation office help you by contacting outside probation and hostels within areas you have indicated you would like to settle down in, on release.

Inside probation get involved in outside courses and help to "shoehorn" you back into the community as best they can.

The other area that they keep monitored, is your work and progress through the system, so your file is kept up to date between them and the prison officers. Anything that is happening outside of the prison in your relationship with your family and friends they will be aware of, through the censoring of your phone calls and letters. I know it is something the system would not like to be made more public than it is.

Keep in mind you have no private life inside except what you say in the visitors hall, and even then they could have lip readers looking at you through the cctv cameras, although I think this is probably prison myth, I would not be surprised.

The other involvement probation inside prison has is your parole and course work, both have an element of input by the probation, both are a strong reason for being as compliant as possible.
However, never loose your pride by giving way to bully tactics, if you have done nothing wrong tell them to go forth and multiply, it will mean plenty of stick, but you will feel better for it. They do get it wrong and you will feel justified in telling them so.