Consider the attack of electrophile at o, m and p- positions of the ring. In each case the intermediate sigma complex is a resonance hybrid of three structures. In case of ortho and para attack the key atom (the atom to which CH3 is linked) carries positive charge which can be dispersed by methyl group by hyperconjugation. Hence these structures are more stable than other structures. Thus we can say the CH3 group is electron donating in nature and increases the electron density of the ring particularly at the o- and p- positions. Thus we say that the CH3 group is electron donating.
For further explanation refer to hyperconjugative effect of CH3 group.