The repo market allows financial institutions that own lots of securities like banks, broker-dealers, hedge funds to borrow cheaply and allows parties with lots of spare cash to earn a small return on that cash without much risk, because securities serve as collateral.
Financial institutions do not want to hold cash because it is expensive—it doesn’t pay interest. For example, hedge funds hold a lot of assets but may need money to finance day-to-day trades, so they borrow from money market funds with lots of cash, which can earn a return without taking much risk.
The market is really 2 markets:
1) the supply and demand of cash
2) they supply and demand of treasuries