Increasing T above 1 tends to spread the probability among the inputs, while decreasing T below 1 tends to concentrate all of the probability on the most likely class.
In the limit that T reaches infinity (or even hundreds, practically speaking), all classes will have the same value. In the limit that T reaches zero (or even 0.001), only the maximum value will be selected.
Increasing temperature is a simple way to correct an over-confident network whose maximum output (going into softmax) is too far away from the next closest output.
The 1/T temperature adjustment effectively scales the inputs to the softmax. A T larger than 1 brings the inputs closer together, and a T smaller than 1 drives inputs farther apart. Since Softmax splits the output probability among the inputs that are closer together, driving the inputs closer together spreads the probability among the inputs.
To answer this question in detail, it may be helpful to think about how softmax works without temperature.
Consider a sofmax layer in which only two inputs are not -infinity, and have values 2 and 4.
Then, going through the softmax layer, the smaller element will have value
$$\large P_i=\frac{e^{y_i}}{\sum_{k=1}^n e^{y_k}}=\frac{e^2}{e^2+e^4}=\frac{e^4}{e^4}\frac{e^{-2}}{e^{-2}+1} \approx e^-2 \approx \frac{1}{9}$$
How does this change if the inputs are instead 12 and 14, both shifted the same distance to the right?
$$\large P_i=\frac{e^{y_i}}{\sum_{k=1}^n e^{y_k}}=\frac{e^{12}}{e^{12}+e^{14}}=\frac{e^{14}}{e^{14}}\frac{e^{-2}}{e^{-2}+1} \approx e^{-2} \approx \frac{1}{9}$$
It makes no difference at all -- adding a constant to all the inputs results in a constant multiplier after the exponent that can be pulled out.
Now, how does this change if we increase the distance between the 2 and the 4, e.g. to 2 to 6:
$$\large P_i=\frac{e^{y_i}}{\sum_{k=1}^n e^{y_k}}=\frac{e^2}{e^2+e^6}=\frac{e^6}{e^6}\frac{e^{-4}}{e^{-4}+1} \approx e^{-4} \approx \frac{1}{81}$$
Changing the distance between the maximum input and those close below it has a major input on the output -- the closer the second-maximum value is to the maximum value, the more the two values will be blended in the output.
The "softness" of softmax is controlled by how far apart the maximal inputs are. Once they are in the tens or 100's apart, it becomes a rather hard-max instead of a softmax.
What the temperature field allows us to do is to control the distance between the values entering the softmax by directly scaling the entire axis.
Suppose we wanted to soften the most recent example above and bring the 2 and 6 closer together. We could use a temperature of $T=2$:
$$\large P_i=\frac{e^{y_i}}{\sum_{k=1}^n e^{{y_k/T}}}=\frac{e^{2/2}}{e^{2/2}+e^{6/2}}=\frac{e^{1}}{e^{1}+e^{3}}=\frac{e^3}{e^3}\frac{e^{-2}}{e^{-2}+1} \approx e^{-2} \approx \frac{1}{9}$$
Here, the temperature of $T = 2$ cuts the distance between the 2 and 6 in half, softening the transition from one to another.
We can also use T values less than 1 to INCREASE the distance between the values entering softmax, and in the limit as T->0, we max the maximum value be infinitely far from the rest as it enters the exponent function. In code, this must be handled as a special case that finds the maximum output instead of selecting an output probabilistically.
So the legal values of T range from 0 (pick the maximum) through infinity (where all values would have equal probabilities because they are all 0 as they enter softmax).