For the buyer to pursue financing. The financing process takes times and banks require either an LOI or purchase agreement as part of the loan package. So an accepted LOI is a critical component to securing financing.
A LOI is typically used as a "starting place" for negotiations on a property. Generally a LOI will be followed up by a formal Purchase Agreement after the terms are settled on. This may or may not be the case in your area, but is a good use of the two documents.