12V DC to 5V DC converter
suha says stabilizing the voltage, but C3 is actually for stabilizing the regulator's control loop. It's the control loop which causes a stable output voltage, not the capacitor. Most regulators, especially LDOs will need C3 to prevent oscillations. 
ESR (Equivalent Series Resistance) is crucial.  

 

The graph from this document shows that for the given regulator a capacitor with an ESR of 1 &Omega; is needed; the document shows how oscillation occurs with a too low ESR capacitor at a 150 mA load.

The regulator's control loop makes that it has a certain response time, so a sudden load change may cause a short dip in the output voltage before the regulator reacts. C2 acts as a buffer to catch those quick changes.  

A 100 \$\mu\$F C1 smooths the input voltage, which improves output ripple, but in general isn't required for the regulator's operation, though you will need a 1 \$\mu\$F capacitor again for stability, especially for LDOs.