This powderpuff tree and other legumes such peas and beans have a mutualistic relationship with nitrogen-fixing bacteria that live inside their roots.
Nitrogen is necessary for plant growth and survival. It is a crucial element of chlorophyll, proteins, and even DNA. Nitrogen is abundant in the air, but plants are unable to use that form of nitrogen.
Instead, some plants have developed a symbiotic relationship with bacteria. The bacteria take in nitrogen gas from the air and process it into water soluble nitrates that plants can absorb through their roots.
In this win-win association, bacteria produce the nitrates needed by the powderpuff tree, and the tree provides housing for the bacteria in its root nodules.