1) Minor Security nit: because you do not want the client software to know the names of your base tables.
and
2) Client App problem: The client app does not behave correctly unless you turn this on. This could happen for instance, because you restructured a former base table into a new structure and organization in your DB and used a view of the same name make the schema appear the same to the app. But the app is trapping the base-table name of the columns, whic is no longer correct unless you turn VIEW_METADATA on.
also:
3) Possibly to conceal base tables from some reporting packages that insist on trying to copy the whole base table to the client. Make them think that the view is the base table so that they will only try to copy the view's data to the client
most likely, you have also heard about how to fix sql mdf file
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