It's intended to help keep songs in order. (There was a similar feature that could be set up in Apple's Contacts; any contact that wasn't allocated to a specific group would be allocated to an "unallocated" group - this proved useful in keeping control over contacts [essentially ensuring that all contacts were allocated to a group]).
I would think that many users keep all their songs in playlists (although, as you point out, many may not).
1. If you have a big song library and want all songs allocated to manageable sized playlists it is difficult to identify unallocated songs.
2. Songs can be in more than one playlist; when a user deletes a playlist they can't safely delete all the songs in the playlist because songs may appear in other playlists. In the case outlined in this thread....
https://forums.irealpro.com/threads/Deleting-playlists.20001/
...the user would delete the playlist first and then unwanted songs would appear in the "Unallocated" group and could then be safely deleted.
3. Duplicated songs are not allocated to a playlist; if there was an "Unallocated" playlist then this is where the song would reside until' specifically allocated by the user.
4. If a user reorders their playlists they may degenerate into a bit of a mess. In this case the "Unallocated" playlist would help the user exercise more control.