The ESP8266 is a great development board right? but when it comes to connecting it to an Arduino board, things becomes messy! That is because the ESP8266 has a logic level of 3.3V and the Arduino logic level is 5V, so you can't connect them directly with harming the ESP8266. The adapter solves all of these issues! The adapter has 3.3V voltage regulator circuit and onboard level conversion circuit which enables a 5V microcontroller power and communicate with ESP-01 easily.