If you only have taxable investments then every rebalance, dividend payment, or capital gains distribution is being taxed at that time. This is a drag on growth. If you put some of your money into tax-deferred then those normal operations don't get taxed at the time, allowing the account to grow much more quickly.

If you also have tax-free investments (Roth), then during retirement you have a great deal of flexibility in deciding what your tax rate is going to be in that year. For example someone might decide to withdraw just enough from taxable and tax-deferred funds to keep within the 10% or 12% tax brackets, and make up the rest with Roth withdrawals.