You can remove your crypto price risk, while still remaining on-chain (and outside the traditional regulated banking system). Some people like that.

ETA: Though, as some people are learning now, you're not actually removing your crypto price risk.

Some jurisdictions don't consider trades towards stablecoins as taxable events

Some of the "stablecoins" are implemented on top of another blockchain, in such a way that it's possible to do crypto-to-stable transactions automatically fully within the blockchain system. That's attractive to the kind of people who want to build ever more complex financial machines.

It also provides a system that can pretend it's not subject to money laundering law.

Here, $UST's justification was a 20% interest for holding. Thus, in theory, just by owning $UST, you make more than you would holding dollar bills (emphasis on "in theory"). Broadly speaking, the raison d'etre of stablecoins is liquidity. Interfacing between fiat and crypto is difficult for banking reasons and taxing reasons, but interfacing between crypto coins is easy. Thus, stablecoins are seen as a useful tool for both accounting, as well as being coins that are hedged against collapses (again, in theory).

Because crypto bros hate paying their taxes, and converting to USD tends to make the IRS interested in the sudden influx of money.

Fewer legal restrictions for a brokerage to hold a stablecoin than USD.

Slippage, in a word.