It gets rid of airpockets so that the roots can get a firm hold and also of course nutrition.

As Spritzhenry says. But don't be too firm, you don't want to compact the compost. I used to tamp it down with a piece of wood but now prefer to simply sharply tap the base of the pot onto the bench after filling it.

And don't forget to water before planting as the compost will sink. Welcome to Goy.

Better to water your compost prior to putting in the pot.

On most plants, I water the compost before planting, so it is moist enough to absorb the water I put on after planting, but it isn't soggy and clumpy. While planting, I tap it--as Mr. B says--and firm lightly with my fingers--or a chopstick, with cactus! After planting, I soak the container three times to eliminate air pockets, and finish settling the soil. I used to tap the pot during the first watering, but I have found that that "puddles" the soil, and compromises drainage.