This is done via tiki-admin.php?page=performance -> Performance
It has two benefits:
Better performance by reducing the quantity of data to transfer.
Cache-busting: the filenames of minified JavaScript files be based on the contents of all the files, not just the filenames, so that when anything changes within a file, i.e. after an upgrade or bug fix, browsers will automatically get the new version of the code (following clearing the tiki caches only). This is especially important with you are using something like mod_expires.