Infants are used to the cozy, naturally swaddled place she called home for 9 months. Then after birth, she cries "What is all this space?! I have these long dangling limbs! What are they? Why do they keep hitting my face? Ahh!"
Hence, they are at peace and sleep better when they are all wrapped up.
A recent Globe and Mail article addressed this very question, and here is my take on the whole swaddling.
All three of my babies slept better when swaddled.
They might initially fight the swaddle, but when held right after, they calmed down and stayed asleep longer. Here are the swaddling blankets we used at each step of their infancy.
Newborn: Receiving blankets
1-2 weeks: Swaddle blankets with the velcro
2 months: Woombies as my baby likes to have her arms near her face
4 months: Sleep sacs with the arms sewn up
By 5 months, my second child was out of them.
My first child had a sleep sac with some fabric sewn on the arms as she liked to feel blankets on her mouth.
My third one seems to like blankets on her mouth too, so I imagine the next step in her sleep development will be a sleep sac with open arms, but with longer fabric so she can easily access her "blankie."
Just make sure they do not overheat or are not too cold.
Enjoy the sleeps!