It provides a excellent extra layer of containment. It is a carry over from decades of competitive swimming and using old ones when playing other sports in lieu of a jock I guess.
I always wear it, I have never worn padded shorts and I have not experienced much chaffing. 170 km day trips, former 4 day a week 50 km/day commute (now only 20 or 40 km!), or 50+ km club rides.
Plus you never know when you want to hop in the water.