Steam is not only a highly efficient mode of transport of heat. Steam is water turned to gas and normally contains tiny water droplets - that is what you see when steam comes from your steam iron. So steam is also transporting moisture into the fabric, which is essential for natural materials like cotton.
Not all water boils at 100°C
We all learned at school that 100°C is the temperature at which water boils and turns to steam. This is still true, but only applies to normal atmospheric pressure at sea level. So if you don’t live somewhere on the top of the world the steam coming out of your iron has 100°C. In a steam generator iron, steam is generated under pressure in a separate unit. And the higher the pressure here, the later the water boils and the hotter the steam: steam generated at 5 bar has already 150°C. So the higher pressure makes the steam hotter and lets it permeate the fabric faster and deeper.