Because it has some merit. It's not the complete picture of a human, but it's a shortcut that gets you in the ballpark. Kind of like a fuzzy picture coming into focus.
People can be evaluated on any spectrum: morality, intelligence, friendliness, creativity, etc. They're all useful, but an incomplete representation of the human.
There are tons of systems that try to lump people into categories. The systems that tend to get popular have enough metrics to be roughly useful but few enough to be easily remembered.
We used to lump people into two categories: good and bad, or friend or enemy. Then we figured out that people can change and be on different parts of that spectrum in different contexts. That blurry picture wasn't clear enough to help us succeed.
The danger comes when you start thinking: "Reds are jerks" or "Don't worry about what that Yellow said." and fall into that mental trap that the fuzzy picture is all there is.