Because it shows some thoughtfulness. 'I know you like x so here's money to spend on that'. Cash looks like you didn't bother.

tbf 95% of the time when I get a gift card these days it's Amazon or a big retail chain, that ain't exactly a deep cut in the gift department either.

We should probably normalize Chinese Red envelopes because honestly I'd take a nice envelope with a hand written note and some crisp bills over the annoying gift cards (https://en.wikipedia.org/wiki/Red_envelope)

Also some people struggle to spend money on themselves without guilt. Gift cards absolve that guilt as they can buy that thing without feeling bad about it