It influences how the engine values situations that could lead to draws. If playing against an (assumed) weaker opponent, it's likely good to avoid draws when there's probably a good chance to win. In reverse, trying to lock in a draw is better than likely loosing later.

Since repetition is one way to get a draw, an engine with positive contempt (it assumes the opponent to be weaker than itself) will score repetitive moves lower and is more likely to pick something else.