Kneading dough does several things:
1) It mixes the ingredients (especially flour and water)
2) Glutenin and Gliadin (two things in flour) mix together to make Gluten, which makes the bread fluffy,...
Dough of any kind is kneaded to work up gluten, which makes the baked product chewy. Biscuit dough is kneaded very slightly to form a tender biscuit with a crumb that is more flaky than chewy.