The arc is formed when contacts separate and as they separate, the arc acts kind of like a capacitor to increase the voltage potential across them, which allows the arc to sustain itself for a dangerous amount of time until the dielectric of the air is enough to extinguish it. The arc chute is a series of plates in the path of that arc that split it up into smaller segments, lowering the energy in each arc segment to where it need less dielectric strength (of air) to extinguish it, or really, to not allow it to sustain itself any longer. The arc chute also serves to cool the thermal energy in the arc. Without arc chutes, the breaker contacts would need to be a lot larger and the heat energy of the arcs would deteriorate it much faster.
It provides no function when closing the breaker, only when opening it.
"You measure the size of the accomplishment by the obstacles you had to overcome to reach your goals" -- Booker T. Washington