Imagine this; you agree to sell something to someone and they will pay you in Bitcoins.  It turns out they have an address with a zillion little outputs in it.  So, they go to launch a send to you and find the fee is going to be huge (to cover the cost of all those inputs in a timely fashion).  The deal falls through; Bitcoin loses.

Now we can wonder how their address ended up so fragmented but what does it matter?  Maybe they were collecting a zillion little drips from faucets.  Whatever; they can't spent it like a large output.