The Alter Rebbe explains that the purpose of creation is to make a dwelling place for God in the lowest realm, giving worldly Torah observance and practical divine service central significance.
וְהִנֵּה, מוּדַעַת זֹאת מַאֲמַר רַבּוֹתֵינוּ־זִכְרוֹנָם־לִבְרָכָה, שֶׁתַּכְלִית בְּרִיאַת עוֹלָם הַזֶּה הוּא – שֶׁנִּתְאַוָּה הַקָּדוֹשׁ־בָּרוּךְ־הוּא לִהְיוֹת לוֹ דִּירָה בַּתַּחְתּוֹנִים. וְהִנֵּה, לֹא שַׁיָּיךְ לְפָנָיו יִתְבָּרֵךְ בְּחִינַת מַעְלָה וּמַטָּה, כִּי הוּא יִתְבָּרֵךְ מְמַלֵּא כָּל עָלְמִין בְּשָׁוֶה. אֶלָּא בֵּיאוּר הָעִנְיָן, כִּי קוֹדֶם שֶׁנִּבְרָא הָעוֹלָם הָיָה הוּא לְבַדּוֹ יִתְבָּרֵךְ יָחִיד וּמְיוּחָד, וּמְמַלֵּא כָּל הַמָּקוֹם הַזֶּה שֶׁבָּרָא בּוֹ הָעוֹלָם, וְגַם עַתָּה כֵּן הוּא לְפָנָיו יִתְבָּרֵךְ. רַק שֶׁהַשִּׁינּוּי הוּא אֶל הַמְקַבְּלִים חַיּוּתוֹ וְאוֹרוֹ יִתְבָּרֵךְ, שֶׁמְּקַבְּלִים עַל יְדֵי לְבוּשִׁים רַבִּים הַמְכַסִּים וּמַסְתִּירִים אוֹרוֹ יִתְבָּרֵךְ, כְּדִכְתִיב: ״כִּי לֹא יִרְאַנִי הָאָדָם וָחָי״, וְכִדְפֵירְשׁוּ רַבּוֹתֵינוּ־זִכְרוֹנָם־לִבְרָכָה, שֶׁאֲפִילוּ מַלְאָכִים הַנִּקְרָאִים ״חַיּוֹת״ אֵין רוֹאִין כוּ׳. וְזֶהוּ עִנְיַן הִשְׁתַּלְשְׁלוּת הָעוֹלָמוֹת וִירִידָתָם מִמַּדְרֵגָה לְמַדְרֵגָה, עַל יְדֵי רִיבּוּי הַלְּבוּשִׁים הַמַּסְתִּירִים הָאוֹר וְהַחַיּוּת שֶׁמִּמֶּנּוּ יִתְבָּרֵךְ, עַד שֶׁנִּבְרָא עוֹלָם הַזֶּה הַגַּשְׁמִי וְהַחוּמְרִי מַמָּשׁ, וְהוּא הַתַּחְתּוֹן בַּמַּדְרֵגָה, שֶׁאֵין תַּחְתּוֹן לְמַטָּה מִמֶּנּוּ בְּעִנְיַן הֶסְתֵּר אוֹרוֹ יִתְבָּרֵךְ וְחֹשֶׁךְ כָּפוּל וּמְכוּפָּל, עַד שֶׁהוּא מָלֵא קְלִיפּוֹת וְסִטְרָא אָחֳרָא, שֶׁהֵן נֶגֶד ה׳ מַמָּשׁ, לוֹמַר: ״אֲנִי וְאַפְסִי עוֹד״. וְהִנֵּה, תַּכְלִית הִשְׁתַּלְשְׁלוּת הָעוֹלָמוֹת וִירִידָתָם מִמַּדְרֵגָה לְמַדְרֵגָה – אֵינוֹ בִּשְׁבִיל עוֹלָמוֹת הָעֶלְיוֹנִים, הוֹאִיל וְלָהֶם יְרִידָה מֵאוֹר פָּנָיו יִתְבָּרֵךְ, אֶלָּא הַתַּכְלִית הוּא עוֹלָם הַזֶּה הַתַּחְתּוֹן, שֶׁכָּךְ עָלָה בִּרְצוֹנוֹ יִתְבָּרֵךְ, לִהְיוֹת נַחַת רוּחַ לְפָנָיו יִתְבָּרֵךְ, כַּד אִתְכַּפְיָא סִטְרָא אָחֳרָא וְאִתְהַפֵּךְ חֲשׁוֹכָא לִנְהוֹרָא – שֶׁיָּאִיר אוֹר ה׳ אֵין־סוֹף בָּרוּךְ־הוּא בִּמְקוֹם הַחֹשֶׁךְ וְהַסִּטְרָא אָחֳרָא שֶׁל כָּל עוֹלָם הַזֶּה כּוּלּוֹ, בְּיֶתֶר שְׂאֵת וְיֶתֶר עֹז וְיִתְרוֹן אוֹר מִן הַחֹשֶׁךְ, מֵהֶאָרָתוֹ בְּעוֹלָמוֹת עֶלְיוֹנִים, שֶׁמֵּאִיר שָׁם עַל יְדֵי לְבוּשִׁים וְהֶסְתֵּר פָּנִים, הַמַּסְתִּירִים וּמַעֲלִימִים אוֹר־אֵין־סוֹף בָּרוּךְ־הוּא שֶׁלֹּא יִבָּטְלוּ בִּמְצִיאוּת.
It is a well-known Rabbinic statement that the purpose of the creation of this world is that the Holy One, blessed is He, desired to have an abode in the lower worlds. But surely with Him the distinction of “upper” and “lower” has no validity, for He pervades all worlds equally. The explanation of the matter, however, is as follows: Before the world was created, He was One Alone, one and Unique, ruling all space in which He created the universe. It is still the same now insofar as He is concerned. For the change relates only to those who receive His life-force and light, blessed be He, which they receive through many “garments” which conceal and obscure His light, blessed be He, as is written, “For no man shall see Me and live,” and, as our Rabbis, of blessed memory, have explained it, that even angels, who are called Chayot, cannot see Him…. This is the concept of the hishtalshelut (downward gradation) of the worlds and their descent, degree by degree, through a multitude of “garments” which screen the light and life that emanate from Him, until there was created this material and gross world, the lowest in degree, than which there is none lower in the aspect of concealment of His light, blessed be He; [a world of] doubled and redoubled darkness, so much so that it is full of kelipot and the sitra achara which actually oppose G–d, saying: “I am, and there is nothing else besides me.” Clearly, the purpose of the hishtalshelut of the worlds and their descent, degree by degree, is not for the sake of the higher worlds, because for them this is a descent from the light of His Countenance, blessed be He. But the ultimate purpose [of creation] is this lowest world, for such was His will, blessed be He, that He shall have satisfaction when the sitra achara is subdued and the darkness is turned to light, so that the Divine light of the En Sof, blessed is He, shall shine forth in the place of the darkness and sitra achara throughout this world, all the more strongly and intensely, with the excellence of light emerging from darkness, than its effulgence in the higher worlds, where it shines through “garments” and in concealment of the Countenance, which screen and conceal the light of the En Sof, blessed is He, in order that they should not dissolve out of existence.