Mulch helps to keep soil and roots cool, which is especially important for young plants struggling to become established in hot weather. Part of the way it does this is by retaining soil moisture.
Mulch can prevent weeds, both by denying the sunlight that triggers germination of seeds, and by acting as a physical barrier between seeds and the soil. And, unlike artificial landscape fabric, it fertilizes the soil (in the case of organic mulches like compost, manure, grass clippings, and aged wood chips). Furthermore, mulch encourages earthworms, which come to the soil surface in the evening to feed on decomposing organic matter.
Mulch keeps plants pretty by preventing soil from splashing on leaves, which can stop the spread of soil-borne diseases. Mulch itself adds a decorative element to the landscape, providing a sense of unity between flowerbeds.