Explain the role of water potential in the movement of water from soil

It's been a while, but I think I can answer this. Concentration gradients tend to shift from high concentration to lower concentrations for equilibrium. So if the water potential is more in the soil and plant, but less in the air, water will want to travel from the soil, through the plant into the air.

Water evaporates into the atmosphere through the means of transpiration. As the water evaporates, it tends to pull more water molecules up along the xylem. This is known as transpiration pull, where because of surface tension of water and capillary action, water is pulled up along the xylem due to transpiration. This is not the only mechanism of water movement in plants however.

Anyways, from the example of transpiration pull, you can see the role of water potential as the water potential in the soil, being high, flows through the plant, and into the air.