Crude cell lysate contains proteins, lipids, RNA, and DNA. Phenol extraction, often with chloroform, is the deproteinization step. Phenol, being organic and hydrophobic, denatures proteins by disrupting hydrophobic interactions, causing them to unfold, partition into organic phase, or accumulate at interphase. RNase treatment may be included but phenol itself removes most proteins and also extracts residual lipids. Chelation by EDTA, mechanical homogenization, and alcohol precipitation do not selectively remove proteins and RNA; alcohol precipitates nucleic acids together while phenol specifically purifies away proteins effectively.
Ref:
NCERT Biology Class XII Principles on Klenow fill-in labeling, Lehninger Chapter 9 DNA cloning techniques, and Molecular Cloning by Sambrook Chapter 10 documenting end-labeling of cohesive termini.