Mindhacks has the scoop:

…in summary it seems that the brain simulates of the outcomes of actions based on your intentions to move because the actual sensory information from the body takes so long to arrive that we’d be dangerously slow if we relied only on this.This slower information is used for periodic updates to keep everything grounded in reality, but it looks like most of our action is run off the simulation.

We can also use the simulation to distinguish between movements we cause ourselves and movements caused by other things, on the basis that if we are causing the movement, the prediction is going to be much more accurate.

If the prediction is accurate, the brain reduces the intensity of the sensations arising from the movement – for good safety reasons, perhaps – we want to be more aware of contact from other things than touches from ourselves.