It's an attempt to turn it into a media machine. If you want to play a DVD or listen to music on your computer, you have to use a keyboard and mouse, or both, and open programs and things.
Media Center, as well as Apple's Front Row, is just a separate system so that you have a remote control and can easily play your media on the screen. You can easily select a DVD to play or pictures to view, without having to go opening different files and things. Connect the computer up to your TV and it really is a media hub.
This is where media players are headed. DVD players and VHS players under your TV will soon be the past. We already have ones with hard drives inside that can record TV. But more and more people are using the internet to get their media. Eventually the film studios will wise up and start offering proper film downloads. Once downloaded onto your computer, you want an easy way to watch them on your nice big TV. Enter Media Center and Front Row.