Why saturated solution of KNO₃ is used to make 'salt bridge'?

Because mobilities of both K⁺ and NO₃^- are nearly same.

Salt bridge is an inverted U-tube containing concentrated solution of inert electrolyte like KCl, KNO3, NH4NO3 etc. These electrolytes are such that mobilities of cations and anions are nearly same.

Functions of Salt Bridge are:

(i) To connect the solutions of two half cells and complete the cell circuit.

(ii) To keep the solution in two half cells electrically neutral.

(iii) To prevent the mechanical mixing of two solutions.