It instantiates it. Take this for example:
echo 'This is an variable pre-incremented: '.++$i;
That will give an error of the warning level about a non-existant variable $i. Now, if you do $i='' or whatever, you can append (or prepend) to it whatever you want.
It's also a way of knowing that the variable will have a default value. So you can code knowing that if say, you use it earlier in a script, you don't have to worry about what the value will be since you know it will be empty.
And a lot of times, it's used just before loops so that items can be appended to it. Something like:
$arr = array('This', 'set', 'of', 'words', 'will', 'make', 'a', 'sentence');
$output = ''; // Start it!!
for($i=0; $i<count($arr); $i++)
{
$output .= $arr[$i].' ';
}
echo $output;
That will output:
This set of words will make a sentence
I hope all that made sense