Rating helps in the following ways:
1. provide a way to measure progress
Rating is not just a number, it is also a objective number that tells us some truth. There is nothing subjective, such as strong, weak, good, beginner, intermediate, advanced, etc. You can look at a child's rating history to see how s/he have been making progress, is it fast or slow, is it stagating. Then you can diagosis if the training or coaching is effective, and decide if anything needs to be changed.
2. help set up a goal that a student can work on
Without a goal, a child will not fully develop to his/her potential.
“Would you tell me, please, which way I ought to go from here?"
"That depends a good deal on where you want to get to."
"I don't much care where –"
"Then it doesn't matter which way you go.”
― Lewis Carroll, Alice in Wonderland
3. rating jump always provides positive feedback and extra motivation
For a developing junior, rating jumps are common. When it happens, it makes the kid happy and also motivates him/her work harder.
4. determine the qualification at important tournaments
Most invitational only, closed tournaments, or international tournaments such as World Youth are choosing participants basing on rating cutoff. If you can't reach the cutoff, you won't be qualified.
5. rating is one criteria for FIDE or USCF awarding titles