Compost arriving from Phase I carries fly eggs, mites, nematodes, and the spores of competitor moulds and weed fungi. A controlled heat treatment kills them. It is not meant to kill everything: the thermophilic fungi and bacteria that convert ammonia in the next stage have to survive, or the compost will never become selective.
That is the whole balance of the operation. Too little heat and the competitors ride into the growing room with the compost. Too much and you sterilise away the organisms that make Phase II work at all.