On a simpler level, the poppet is one of the instruments of witchcraft. These dolls supposedly had some kind of power; you could strick them pins, rip arms off, and otherwise torture the poppet, and something similar/bad would happen to the person the poppet represented. If you were "caught" with a poppet, it was serious evidence that you were a witch, even though it might just be a doll and you might have stuck you needle in for safekeeping.
So, at minimum, the poppet is and symbol of witchcraft and serves as a valuable tool to move the plot forward.
The poppet is a symbol of all of the innocent victims that, at the hands of manipulative and and attention-seeking girls, lost their lives. Just as Abigail sees Mary Warren making the poppet, and takes advantage of that situation to accuse Elizabeth of witchcraft, so do many of the townspeople take advantage of other innocent situations and women, in order to achieve their own purposes, whether it be revenge, greed for land, redemption from sin, jealousy or hatred. Soon, naive or innocent communications are brought forth and used as evidence against women. Consider Goody Good, who went away from Mary Warren mumbling; later, Mary brings this innocent act up in court and they use it as evidence to convict Goody Good of witchcraft. Consider Thomas Putnam, greedy for George Jacob's land; he sees an opportunity and prompts his daughter to cry Jacobs out for a witch.
The poppet represents all of the many situations that people used to their advantage as they accused others of witchcraft.