Why does Micelle Formation take place …

Soaps are sodium or potassium salts of long chain fatty acids. The action of a soap is based on the presence of both hydrophilic and hydrophobic groups in a soap molecule. This action emulsifies the oily dirt and helps in its removal.
The two ends of a soap molecule have different properties. When soap is added to water, the ionic, hydrophilic end of soap molecule dissolves in water. The hydrocarbon chain of soap molecule is hydrophobic and it dissolves in hydrocarbons i.e. links with oily dirt. The hydrocarbon chain of soap molecule orients towards the oil droplet while the ionic end orients towards water (polar solvent). This is how, soap molecules form structures called micelles where the oily dirt is collected in the centre. Thus, soap micelles help in dissolving dirt in water. Micelles stay in solution as colloids and the dirt suspended in the micelles is easily rinsed away. 
Micelle formation will not take place in a solvent like ethanol because ethanol will dissolve the hydrocarbon chain of a soap molecule also.