We do it because we legitimately want them to improve, and the last resort is "if we can't work it out by X, we can no longer employ you". I don't think we've done it more than once or twice, though, because increasing the directness of the feedback that the employee is not doing well has generally worked.

I've never seen anyone put on a PIP where the intention was anything other than eventual firing. In all these cases, the person was doing an awful job for over a year, or in some cases, since they were hired.