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How does psychoanalytic theory explain why people engage in projection?

According to psychoanalytic theory, people sometimes defend against their own unwanted motives, conflicts, and behavioral tendencies by identifying them and decrying them in other people. This has been called projection.

I don't understand the reasoning behind Projection as a Defense Mechanism. I mean, why tell someone they lie when you are the one prone to lying? Why accuse other people of something they haven't done but what you most likely would do if you were in their position? In what way does this tendency help to deal with inner conflicts according to psychoanalytic theory?