The small size of the 2-bolt 'SPD' cleat allows you to have a 'street shoe' sole with a recessed pocket for the cleat. This is much better for MTB / touring / commuting, where you're on and off the bike a lot.

The larger size of the 3-bolt 'delta' road cleat pretty much dictates the 'racer' ballet-slipper look of road shoes.

Being 'clipped in' allows you to use your legs to pull and push on the bike, which is good on trail and in urban environments where you use a little more 'english' then just cruising down the road. On the road, again, you can 'pull' on the back side of the pedal stroke (this is why tri-guys ride the way they do), and it also helps keep your feet on the pedals if you 'spin out' during a sprint or fast downhill.

WRT 'normal looking' shoes, Pearl Izumi's 'Fuel' line look like high-end running shoes, while their 'X-Alp' shoes have a little more off-road look to them.