Because, in the 1990s, you would print out your document before giving it to someone else to read. In those times, sometimes you'd want to include text in the document that shows while you're editing it (e.g. notes to yourself or draft text you might want to refer to later) but not when printed.

I believe you would see hidden text by default (but this was a long time ago and I may have misremembered) when in "normal mode" (later "draft mode" and now removed entirely), which was the default view and showed a long continuous stream of text without the computation expense of calculating page break locations. But when you switch to "print layout mode" (now the usual view unless you're in reading mode) it would be hidden, so you could see what the document would be like printed, unless you explicitly turned on the display of hidden text in that mode.