By adding steam in one way or another, you are encouraging the dough to grow to its full capacity before its surface dries out and forms a crust. Without steam, the crust may set before this has happened.
In the quest for the perfect loaf, we're looking for as much airiness in the bread as possible, and this is how steam aids that process.
So in a domestic oven, how do you get the effect of the steam without losing the heat from the oven?
As I have talked about many times in my classes, domestic ovens are all different, some older than others and often wildly varying in their efficiency, so getting steam in your oven can take a bit of trial and error.
When I bake, I put about an inch of water in a roasting tin at the bottom of the oven, a few minutes before baking and shut the door. I happen to have a fairly new oven, which has a good seal, however, you might find that if your oven is less well sealed, the steam may just escape.
When the bread's been in for about 15 minutes, I take the tray out so that it can form a really good crust.
Another, more foolproof method is to use a large, cast iron casserole dish to bake your bread in. Put the casserole in the oven with the lid on when you pre-heat the oven so it gets really hot. When you're ready to bake, carefully lower your bread into the casserole on a piece of baking parchment (I use the silicone ones - available from Poundland! - yep, that's me). Bake with the lid on for the first 20 minutes, then take the lid off for the last 25-30 minutes. The casserole acts like a Dutch oven, retaining the moisture from the dough in the first 20 minutes giving your bread a really good oven spring. Try it, it works!