Because people have psychological barriers (naturally or "imposed" via education) that alcohol or other psychotropic substances help tearing down. Not having those barriers is a great help in having a great party.

But obviously not everyone is the same in that regard and also the very definition of "party" and "great party" can change.

Indeed. In my experience, once the alcohol level has crossed a certain threshold, you need to be taking part to think it's great. If you are a non-drinker, for whatever reason (pregnant, medication, morals, ...) what you get to observe beyond that threshold is a huge turnoff and the opposite of a great event.