Capacitor Bank

Because we aren't smart enough to search for another solution?

Read or google Power factor Correction and RLC Circuit.

Maybe it diminishes inrush current. [?]

Because parallel does not work?

"Reactor, Series

(also current-limiting reactor), a high-voltage electrical apparatus designed to limit the current of a short circuit and maintain adequate voltage on the buses of distribution switch gear during a short circuit in a network. It consists of an inductance coil, on which the principal voltage drop occurs during the short circuit. Such reactors are also used to limit the starting currents of synchronous electric motors and to compensate reactive power in order to improve the transmission capacity of power lines. For voltages up to 35 kilovolts in indoor installations, series reactors are in the form of coils whose turns are cast in concrete columns;for voltages of 35 kilovolts and higher, the coils are mounted in steel drums filled with transformer oil.

The principal technical parameters of a reactor are the nominal voltage and current, together with the relative inductive reactance-the percentage ratio of the voltage drop on the reactor at the nominal current to the nominal phase voltage of the network. In order to reduce the voltage loss in a reactor when a load draws current through the reactor, double reactors are used, consisting of two coils wound in opposing directions with each coil connected to its own line. When both lines have the same load, the magnetic fluxes of the coils practically compensate each other so that the inductive reactance and voltage loss are small. During a short circuit in one of the lines, the resultant magnetic flux in the reactor increases sharply because the magnetic flux created by the coil with nominal current is much less than the magnetic flux of the coil with the short-circuit current. The inductive reactance increases, and the magnitude of the short-circuit current is limited."

http://encyclopedia2.thefreedictionary.com/Series+Reactor

Because that's what it says on the wiring diagram and we can't be bothered to ring the manufacturer to ask?

Short, sweet, and to the point, that's why you're so popular around here.

And let me wish you a fine 'Alo 'Alo this morning.

(Yeah, I finally stumbled across the reference for your forum pic, so no more confused questions from me.)

http://www.rww.co.za/downloads/Reactors_and_Shunt_Capacitor_Banks.pdf

From what I could gather by researching online, it is the third harmonic that is main concern in the overload current of the capacitor in certain applications of high current draw such as arc furnaces, etc.

The inductor is simply there to form a resonance at some frequency lower and away from the third harmonic to substantially reduce the transmission of this harmonic back to the power source, and to protect the capacitor from inrush current.

I am not an electrical engineer, and I stayed in my own bedroom last night, not Holiday Inn.

Reactors used with capacitor banks are Filter, Damping or discharge reactors.
Filter reactors are either in series or parallel to capacitors which together form a filter circuit to weed out harmonics.
Damping reactors are connected in series with shunt capacitors to limit inrush current when capacitors are switched in, & limit out-rush current to adjacent capacitor / bank in case of during close-in faults, and/or to de-tune capacitor banks in order to avoid resonance with power system.
Discharge reactors are used to limit fault current in high voltage system - generally used in bypass circuit.