Wearing Baby in a correct physiological position gives him security and helps him feel confident and active in supporting his body and clinging to the wrapper.
Being supported and rocked make Baby's muscles relax when he's worn and sleep is made easier. The upright position facilitates digestion, reducing acid reflux and colic.
Babies have a fundamental need of being supported and wrapped by the adult. This physical and emotional security will soothe the child when he's worn properly, can feel the outlines of his body and doesn't have to fight gravity to feel supported (spreading his arms and legs, sending his head backwards...).
In this position, Baby's limbs are close together, thus allowing him to easily bring his hands to his mouth just as he did in utero but which is not so easy now because of gravity.
With his knees high up and his spine in a curve, Baby's head is nicely supported. This avoids tensions in his neck and back, which is not mature enough to support his head.