The dofollow tag -- contrast with nofollow -- tells the search engine to follow the link to any other web sites. Applying dofollow you encourage other people to commenting on your blog. Why? Because you want to build an interactive community up in your topic.
If people are commenting on your blog, it is natural to give them something in return. And that is the backlink to their website. The search engine follows that link and leads to their site. Those people got a backlink this way which helps to increase their ranking.
But... you may ask, why are also in use the nofollow?
In one respect this way you have less quantity outgoing links, leeding to better ranking. On the other side, it is useful against spammers who are commenting solely for getting more incoming links to their webpage.
To avoid spam content, you can use the Spam Karma plugin on your Wordpress blog. Consequently, if your blog is dofollow, this plugin filters out the spammers.
All the best,