Try for a moment to think about nothing—no people, no plants, no water, no air, no matter, no energy, no time, no space, no God. Nothing. Simply nothing. The more we ponder such nothingness, the more clearly we realize that the notion of nothingness could not be further from the truth. To posit that God created everything out of nothing immediately resolves the issue. And that is precisely what the concept of creation ex nihilo does.
First and foremost, creation ex nihilo advances the doctrine that the eternally existing God created the universe out of nothing at all.
Furthermore, creation ex nihilo acknowledges that all that exists except God was created by God a finite time ago.
Finally, the doctrine of creation ex nihilo rules out the idea that such finite realities as space, time, and matter emanate from the essence of God: creation is neither divine nor a derivative of God’s essence.
Simply put, the God of all that exists freely chose to speak, and the cosmos leaped into existence. In the beginning was the Word, and the Word was with God, and the Word was God. He was with God in the beginning.
Source (and for further study), see William Lane Craig, On Guard: Defending Your Faith with Reason and Precision (Colorado Springs: David C. Cook, 2010).