It serves a few purposes. The first one has been mentioned a few times: it allows the lungs to expand and the amniotic fluid to clear out.
While in the womb, the most oxygenated blood (coming from the placenta) gets quickly directed up to the brain. This requires a series of valves that function until the baby takes their first breath, then the pressure change from them breathing/crying closes those valves so the vascular system can run properly in the newborn.
When people say “the baby was born with a hole in their heart”, they’re usually referring to the failure of the valve between the left and right atria (foramen ovale) to seal completely upon that first breath.
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