How does carbon dioxide increase the Earth's temperature?
Carbon Dioxide is an effective greenhouse gas.
A greenhouse gas is a gas that is above the Earth's atmosphere and acts like glass. If you think about a greenhouse, the glass allows for heat to come in, but it reflects some heat back off. In a similar way, the Earth has it's "window," and the Earth is the stuff inside. Here's a picture to give you a better idea of where they are:
As you can see, only some of the light is taken in, and some of the light is reflected back into space. The three greenhouse gasses are carbon dioxide, methane, and water vapor. Carbon dioxide plays a huge role, along with methane and water vapor, in making sure the Earth has a good temperature.
In fact, without the greenhouse gasses, Earth would be 86ºF colder.