A reader suggests it's a signal to other administration officials that they will be looked after if they keep lying or stonewalling to the press and Congress in the next eighteen months:
The commutation of Libby's sentence was a Machiavellian move meant to send a message to people who work for the Administration. The message from the President and the Vice President is "we will protect the loyal".
The script of this presidency is more like the Sopranos than the West Wing. Like the mafia, loyalty is critical to the survival of this Administration. Just like the mafia, Cheney and Bush often ask Administration officials to operate outside the law, or at the very least, in the gray area and without Congressional or judicial approval. If Libby were sent to jail, this could have a devastating effect on the loyalty that Administration officials show to Bush and Cheney. The people in the Administration would start to worry more about their own skin and less about pleasing their bosses.
During the next 18 months of the Bush presidency the Democratic Congress will issue subpoenas to Administration officials on any number of scandals emanating from the White House, some known (Iraq and the firing of the prosecutors) and some still unknown.
Any Administration official who is required to testify in Congress and is aware of wrong-doing on the part of the White House will be worried that they could end up in jail like Scooter if they are not hyper-vigilant about the truth. If Scooter went to jail these potential Administration witnesses in future Congressional hearings would be less likely to be "team players" for the White House. The importance of the Libby pardon is that it lets these potential Administration witnesses know that the President will protect them and nobody else will. (See the press and the Democrats howling for Scooter's head.) This will help Bush and Cheney keep a unified front against a hostile Congress.
For those who say Bush had a principled reason for granting clemency... Fogetaboutit. This is all about self preservation.