The reason that cats like to 'knead' before they lie down is due to a natural instinct that they are born with that they used in the wild.
The cats "Knead" before they lie down because they are trying to create a soft space to lay down such as in the wild the cat would knead the grass to make a nice bed on the ground when they would sleep.
So they continue doing the same thing by kneading even with bedding or in their bed or even just when the cat lays down beside you or in our lap.
Just like dogs who go in circles a few times or so before they lay down it's just a natural instinct.
My cat has a blanket in his bed and will straighten out the blanket before laying down on it and kneads the blanket before he lays down for his nap or for the night to sleep.