Why start an ArrayList with an initial capacity?

If you know in advance what the size of the ArrayList is going to be, it is more efficient to specify the initial capacity. If you don't do this, the internal array will have to be repeatedly reallocated as the list grows.

The larger the final list, the more time you save by avoiding the reallocations.

That said, even without pre-allocation, inserting n elements at the back of an ArrayList is guaranteed to take total O(n) time. In other words, appending an element is an amortized constant-time operation. This is achieved by having each reallocation increase the size of the array exponentially, typically by a factor of 1.5. With this approach, the total number of operations can be shown to be O(n).

Because ArrayList is a dynamically resizing array data structure, which means it is implemented as an array with an initial (default) fixed size. When this gets filled up, the array will be extended to a double sized one. This operation is costly, so you want as few as possible.

So, if you know your upper bound is 20 items, then creating the array with initial length of 20 is better than using a default of, say, 15 and then resize it to 15*2 = 30 and use only 20 while wasting the cycles for the expansion.

P.S. - As AmitG says, the expansion factor is implementation specific (in this case (oldCapacity * 3)/2 + 1)