Canonical link is the prefered URL when you have several different URLs having identical content. If you set the Canonical link, search engine will only count it and ignore the rest with the same content. so it's good for SEO because search engine will not think you have too many "links with duplicated content".
I'll post an example for you to understand. Have an online store, and you have a category that is toys. and want to see the price of toys 0 ~ $ 10 and another $ 11 to $ 25 these pages have the same content (or similar) to category so it would be great to put a canonical index much content and not followed . also depends on how you approach it, like if you're interested in that index, but it is an example for you to understand.