Possible reasons for placing a man who is in the act of excreting waste in a scene which is widely considered holy include:

* Tradition.
* Perceived humor.
* Mythical Defecation by Dwarfs
* Finding the Caganer is a fun game, especially for children.
* The Caganer, by creating feces, is fertilizing the Earth. However, this is probably an a posteriori explanation, and few cite this reason for including the Caganer in the Nativity scene.
* The Caganer represents the equality of all people: regardless of status, race, gender everyone defecates.
* Increased naturalism of an otherwise archetypal (thus idealised) story, so that it is more believable, taken literally and seriously.