In internal combustion engines, exhaust gas recirculation (EGR) is a nitrogen oxide (NOx) emissions reduction technique used in petrol/gasoline and diesel engines. EGR works by recirculating a portion of an engine's exhaust gas back to the engine cylinders. This dilutes the O2 in the incoming air stream and provides gases inert to combustion to act as absorbents of combustion heat to reduce peak in-cylinder temperatures. NOx is produced in a narrow band of high cylinder temperatures and pressures.
In a gasoline engine, this inert exhaust displaces the amount of combustible matter in the cylinder. In a diesel engine, the exhaust gas replaces some of the excess oxygen in the pre-combustion mixture.[1] Because NOx forms primarily when a mixture of nitrogen and oxygen is subjected to high temperature, the lower combustion chamber temperatures caused by EGR reduces the amount of NOx the combustion generates (though at some loss of engine efficiency).[2] Gasses re-introduced from EGR systems will also contain near equilibrium concentrations of NOx and CO; the small fraction initially within the combustion chamber inhibits the total net production of these and other pollutants when sampled on a time average. Most modern engines now require exhaust gas recirculation to meet emissions standards.

Essentially, it's to dial the combustion temps down a bit, hopefully out of the range that causes NOX emissions.

With no EGR, the early L27's were slightly more susceptible to burning valves.