The condenser or capacitor in modern speak. Is part of a tuned LRC (Inductance Resistance Capacitor) circuit that is composed of the coil and wiring and the condenser.

Essentially it causes the energy release when the points open to generate maximum spark instead of a weak spark and burnt to-a-crisp points. This is why I keep harping on the "test for a nice BLUE spark" because a weak condenser can cause a weak yellow worthless spark and burnt points while easily still firing a timing light.