ShalomNewYork.com

One of the reasons that the anniversary of a tzaddik’s death is considered a day of rejoicing[67] is that when a tzaddik dies, the purpose of his soul’s descent into a physical body has been accomplished.
To explain: The intent of the descent of the soul to this earthly plane reflects the paradigm of “descent for the sake of ascent.”[68] Through the Divine service it accomplishes while in a body the study of Torah and the observance of mitzvos  a soul can ascend to a higher level than that on which it existed before its descent. Although in its non-corporeal state, the soul is “hewed out from below the throne of glory,”[69] and is “pure,”[70] these spiritual heights cannot be compared to the peaks it reaches through its Divine service on the material plane. SichosInEnglish.org