Say you step from 0A to 1.5A suddenly. What will the rail do?No way. It won't be responsive unless the load is actually something enough to discharge it quick.
The LM317 has a very poor load transient response with just 1uF; it's rated for about -0.5V when the load increases, and +0.5V when it increases. (Page 8 of the datasheet.) Increasing the cap provides a "buffer" which keeps the output voltage stable during transient loads. Remember, a lab power supply is intended to be as perfect a voltage source as possible.
The supply schematic I drew up has very good transient response of less than 5mV down and 2mV up.
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