The W3C also oversees a lot of other standardization processes that aren't directly related to web browsers, like RDF. There are people who find this useful.
I think a lot of it is a power play. The W3C wants to be relevant, and the most relevant things in the web world are HTML, DOM, and CSS (there's also ECMAScript, but that already has a different standards body that owns it).
There are a lot of other standards that use HTML, CSS, and the DOM, such as ePub. The W3C wants to be the normative reference for these core web standards; many times, one standard will have to refer to the other, so the W3C wants to be the one that defines the "official" HTML standard.
But the W3C's process and policies are just terrible. They let people take over standards who have no intent on working with those most impacted by the standards, the people who develop the browsers that billions of people use daily to access tons of diverse content. So instead of just providing a lightly edited snapshot, possibly with some WIP features removed, of what the WHATWG produces, they start going in and meddling and making changes with insufficient justification so you have two forked standards providing a lot of confusion for everyone.