Radio transmitter amplifiers in most telecommunications systems are required to be "linear", in that they must accurately reproduce the signal present at their input. An amplifier that compresses its input or has a non-linear input/output relationship causes the output signal to splatter onto adjacent radio frequencies. This causes interference on other radio channels.
The predistortion circuit inversely models the amplifier's gain and phase characteristics and, when combined with the amplifier, produces an overall system that is more linear and reduces the amplifier's distortion. In essence, "inverse distortion" is introduced into the input of the amplifier, thereby cancelling any non-linearity the amplifier might have.
Predistortion is a cost-saving technique. Radio power amplifiers tend to become more non-linear as their power increases towards their maximum rated output. Predistortion is a way to get more usable power from the amplifier, without having to build a larger and more expensive amplifier.