What exactly does carbonated water do?
Carbonation produces the textural effects associated with effervescence, first of all, and a lot of people find that texture enjoyable.  Texture is a huge part of the culinary experience and affects how flavorful compounds contact your tongue, thus affecting its perceived flavor.

Carbonation also raises the acidity of a beverage slightly, due to the presence of dissolved carbonic acid in the solution.  As @Joe mentions in comments, this can promote the release of gasses with additional dissolved flavorful compounds.  All of this can have a suppressing or enhancing effect on other flavors (a topic which is absurdly complicated and still being explored by food scientists much smarter than I).

Basically, the point of carbonating is similar to the point of pureeing something, or the point of dehydrating it.  It's a fun and easy way to change how you experience the food--or beverage in this case.