Axial tilt, also called obliquity, refers to the angle a planet's rotation axis makes with the plane of its orbit. The Earth is currently tilted 23.5° from this plane, resulting in many remarkable effects. The tilt of the Earth can be attributed to the stabilizing effect of the Moon.
Axial tilt is one of many phenomena involved in the Milankovitch cycles.
The tilt of the Earth's rotation axis provides conditions for its climate to be suitable for life. By altering what portions of the Earth get the majority of incoming sunlight, no region on Earth is allowed to heat to extreme temperatures. This can be seen in Figure 1; throughout Earth's orbit around the Sun the Northern and Southern Hemispheres alternate which side directly faces the Sun, preventing any region from extreme heating.
A common misconception is that seasons are caused by the Earth moving farther or closer away from the Sun. The variation of which hemisphere faces the Sun at a given time, as mentioned above, is in fact what causes seasons on Earth. When the Northern Hemisphere is facing the Sun, seen in Figure 1, it is said to be Summer there (the first day of summer, or the summer solstice, occurs when the Northern Hemisphere is maximally facing the Sun). This also marks the first day of Winter in the Southern Hemisphere.
Since the Earth's rotation axis remains fixed, when the Earth moves to the opposite side of the Sun it is said to be Winter in the Northern Hemisphere, and Summer in the Southern Hemisphere, as it is now the Southern Hemisphere that receives the majority of the Sun's incoming energy.
The tilt also produces effects such as the Midnight Sun, where the Sun never sets during some summer nights in very high-latitude regions.
The tilt of the Earth results in the poles not receiving as much energy as the equator - at a 23.5° tilt, the poles only get around 40% of the energy the equator gets. This 23.5° tilt is also not set indefinitely as it changes over long periods of time (around 40,000 years), ranging between 22.1° - 24.5° (a factor in natural climate change). Both of these factors allow for ice to build up year-after-year in high latitudes, eventually creating massive ice sheets. This ice has drastic effects on the Earth's climate system due to its high albedo, among other things.