It is the shape of the contact patch and deflection. 23c tires have less rolling resistance than 20c.

edit #1:
oops, datinker said the same thing-sorry. Anyway, it's all true!

edit #2
About the only significant way tires lose eneergy is in flex. All tires deform at the contact patch...The tire does spring back to its round shape, but not with 100% efficiency. Some of the energy is lost as heat- not really noticeable by us on bicycle tires, but place a hand on your car's tire tread next time you park and feel the warmth. That heat comes from tire flex (and a bit of friction between the tire and the road), and the eneregy that goes into heating that tire is energy that deos nothing for us as far as going down the road. It's lost energy.
contact area= tire pressure/ weight. 100psi tire supporting 100lbs has a contact patch of 1 sq inch.
width has nothing to do with how big the contact patch is, but it does influence the shape of that contact patch. to make a 1 sq inch patch, for instance, a narrow tire winds up with a long contact patch while a wider tire ends up with a shorter one. The shorter footprint means you end up flatening less of the tire's casing to achieve it, which means you're flexing less tire and consuming less energy rolling down the road.
Additionally, a wider tire corners better due to the shape of the contact patch (which presents a more stable better-balanced profile to the road).
So why aren't Tour de France racers on 35-mm wide tires? Tooo wide means more aero drag- plus a bigger tire is heavier, which hurts climbing and acceleration...
No I am not this smart- this was written by Garrett Lai