1. It's therapeutic. Simply the act of molding clay in one's hands whether you're a child or an adult can be very calming. Remember those stress balls that were once so popular? Manipulating the clay can help relieve stress or even be an outlet for young children who physically express their emotions.
2. It's an outstanding sensory development activity for little hands. Young children are still working on fine motor skills and dexterity. Rolling, squeezing and forming the clay helps them in this area.
3. It's play based learning. You might not realize it, but playing with clay is promoting those little minds to get busy by thinking about what they're going to create and how they're going to create it. This type of creative play promotes imaginative problem-solving skills. Kids, of course, think it's just plain fun.