They mask what you can hear and reduce audio stimulation.
If you are trying to fall asleep, structured sounds, even faint ones, can keep you awake. A dripping faucet might not make a lot of noise, but the distinct contrast between noise and silence is enough to draw your attention.
Unstructured noises, often referred to as white noise, are loud enough to mask distracting structure noises, but because they are diffuse, there is nothing for your attention to latch onto. Your brain spends less energy processing sound, and you become less stimulated and more relaxed.
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