Reincarnation is a satisfying concept on many levels. It helps explain Karma. This is the law of cause and effect. We ultimately receive what we give. As the bible says: "Whatsoever a man soweth, that shall he also reap" (Galatians 6:7). We create our own karma by the way in which we lead our lives. If we do a good deed today, we will eventually be rewarded, though not necessarily in this lifetime. Likewise, if we do harm, we will eventually be punished. If we are rich but lazy in this lifetime, at some stage we will have to work hard and struggle to make ends meet to balance out this experience.
Karma allows us freedom of choice. It is fair and automatic. It has nothing to do with morality, and there is no sense of judgment in it. There is a great deal of injustice in the world, but the law of karma ultimately takes of it and balances the books. Plato described this well when he wrote: "Virtue has no master, and as a man honors of despises her, so will he have more of her or less. The responsibility is on him that chooseth. There is none on God."
Karma also affects our personalities. As we are here to learn certain lessons, we are given certain physical, mental, emotional, psychological, and spiritual qualities at birth, and these shape our entire lives. Seeing reality through these qualities allows us to experience the various situations that will help our growth and development. Of course, in this lifetime, we are not just paying off karmic debts. Through the experience of our lives and our reactions to them, we also pick up karmic debts that will have to be paid back later either in this lifetime or in a future life. We will also gain karmic credits for our good deeds (dharma).
It is not what happens to us that is important, it is how we react to them. If we respond to a negative situation in a positive way, we are effectively creating good karma, rather than bad. It means that we have learned the lesson and can move on. Conversely, if we react to the situation in a negative way, by becoming angry, stressed out, bitter, jealous, and full of desires for revenge, it shows thatt we have no learned the lesson. As a result, at some stage, we will be presented with a similar situation again. This will continue to happen until we finally learn the lesson.
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