The tensor product is a way to encapsulate the notion of bilinearity, and can be thought of as a multiplication of two vector spaces.
The dimension of a tensor product of two vector spaces is precisely the product of their dimensions, so when one wishes to show that a certain vector space is finite dimensional, one can try to show that it is a subspace of a tensor product (or an image of a tensor product) of two finite dimensional vector spaces.
A power series is said to be D-finite if it satisfies a linear differential equation for some polynomials with , and . Let denote the -subspace of spanned by the derivatives of . Then the property of being D-finite can be seen to be equivalent to requiring that the subspace is finite dimensional over . From this, it is easy to see that the sum of two D-finite generating functions is also D-finite since . But what about the product of two D-finite generating functions?
We can define a map by multiplication: the pair simply goes to . The subspace spanned by the image of this will contain by the Leibniz rule for taking the derivative of a product. But this map is not linear, so we cannot say much about the dimension of this span. However, it is bilinear, and hence we have an associated linear map whose image is precisely the span of the image of the bilinear map, and we see then that , so is also D-finite.
This finite dimensionality argument is used when proving a basic result about affine algebraic groups over fields, namely that they admit a faithful linear representation (and thus are rightfully called linear algebraic groups).
An affine algebraic group is of the form where is a algebra of finite type endowed with a comultiplication . Constructing a faithful linear representation of boils down to finding a surjection where the polynomial ring is endowed with the usual Hopf algebra structure. This is done by choosing carefully a finite set of generators of the algebra in such a way that the spanned finite dimensional vector space satisfies and writing down the coefficients. See e.g Borel's book Linear Algebraic Book, sections I.1.9 and I.1.10