Mostly for aesthetics. Many people want their reef to look as much like the ocean as possible. But the sand also adds a place for microorganisms to live, just as they do in the ocean. Anything from snails that bury themselves in the sand to beneficial bacteria live in the sand. It is not necessary for a successful reef tank though. Do your research though on what type of fish you want to keep. There are a few species that bury themselves in the sand at night to sleep. For these you want a finer and deeper sand bed.That is exactly what I am looking for. So what is the substrate for then?
My best suggestion is to begin with the end in mind. What do you want your finished tank to look like. From here you can work backwards and see what you will need to make it happen.
Jen