When you're flying a plane, you have to relax. If you are tensed up you'll never be able to make the fine physical movements and mental judgments that you need in order to fly and land the plane. If your muscles are tensed up, you're fighting yourself all the time. You wear yourself out that way, and the delicate things your hands and feet need to do with the controls get lost in the frozen situation of your muscles. You become exhausted, and you don't get the job done.
So what does this have to do with playing music? Only everything. If you are trying to play your banjo or mandolin or guitar or fiddle and you're all tensed up, you can't possibly play the notes with the kind of tone and rhythm that you need to. If you are putting a bunch of muscular effort into things that should need only a few ounces' pressure, you're going to come out with some pretty bad-sounding music. Did you ever see J.D. Crowe, Sonny Osborne, Doyle Lawson, Jimmy Gaudreau, or Kenny Baker on stage? Those guys look (and are) RELAXED. The are able to focus all their attention on the notes (and the sound) they want to play, and when they get off stage they're not worn out-- they could get up there and do the same thing again.
Playing tensed-up restricts your tone, your speed, and your ability to really pay attention to the sound you're making (which, after all, is the point of it). RELAX. You'll be glad you did.