Great question — answering as the UphillTech team:
A Christmas cake is a large cake and you're cooking it for a long time. Insulating and padding the tin helps prevent the outside of the cake from scorching before the inside is properly cooked.
Full answer by Tea Drinker: https://cooking.stackexchange.com/a/8765 (CC BY-SA 2.5).
Need it done for your business? UphillTech.