This whole thing started waay back in the 1900s with the railroads.
A ticket is a license to ride any time you want. Show up any day for any train and if there’s still an empty seat on it when you get there, get on. That how trains worked.
Later on they added the idea of a separate reservation. The intent was now you could “get in line” early, ensuring that there’d be a seat on that future date and time when you went out to the train station. It’s mostly a convenience to the railroad, telling them when you intend to exchange your ticket for an actual ride.
It’s really no different from a dinner reservation at a restaurant, where the seating and the billing are two totally separate transactions.
The airlines simply picked up that traditional ticketing style and used it from the early days in the 1930s when the airlines got going.
Fast forward to the 1960s …
People realize they can make buy one ticket and make several reservations. That way if the meeting gets out early they have a seat on the early flight, and if it runs late they also have a seat on the late flight. And if it gets out on time as expected, they have a seat on the dinner-time flight. Pretty soon flights are leaving with lots of empty seats.
So by the late 60s they change the process to prevent a single ticket from having more than one reservation at a time. But there’s no penalty for no-shows. You didn’t use the ticket, so it’s still 100% good for use later today or tomorrow. And if you’re a frequent traveler, there’s no reason not to buy 2 or 3 tickets in advance, make your 3 reservations for early, middle, and late after tomorrows meeting, then actually use the one ticket that fits your actual schedule, and save the other 2 unused tickets for next week. But one more next week to have 3 reservations for the next week. Lather, rinse, repeat.
The next innovation to offset this problem is the oversale. We still have tickets separate from reservations. But now we book more reservations than we have seats. Because lots of people are making more reservations than they intend to use. And lots of people with only a single reservation flake for whatever reason, whether their fault, the airlines, fault, or just back luck. So having a few extra reservations helps fill the airplane.
Just about now (1978) deregulation hits and the industry turns from a public utility with all prices, routes, and schedules controlled by the government into a discounting mad-cap free-for-all. The airlines chop prices and make up for it with massive overselling to ensure the airplane always goes out full. The folks left behind bought the cheapest tickets, are price-only disloyal shoppers, so who cares if we piss them off. Or so some marketing geniuses said.
Well, Congress got into the act and says now there’s got to be denied boarding compensation. As explained by folks upthread. So now for the airline, overbooking is no longer a one-way bet. If they overdo it, they pay. The amount of actual denied boarding plunges to a very small fraction of 1 percent.
The next series of innovations in the 1990s are the change-restricted partly non-refundable tickets. Which are really about firming up the demand so there’s less need to overbook. Presumably folks willing to risk part of their fare if they no-show will be more careful about not missing the flight.
Then in the 2000s we got the internet. Which lets us sell the last seat at the last minute for cheap. And which enables total comparison shopping by all the customers.
The result of that is every airplane is planned to be damn near full all the time. Which means that if a person misses their flight, or if a flight cancels and 150 people miss their flight, there are very few seats available later to accommodate those folks.
I agree with the folks who said “the current system doesn’t make sense”. But it’s helpful to understand the current system wasn’t designed from scratch to be as it is. It’s the result of about 10 years of evolution. Nobody would build this cockamamie set of pickpocketing and counter-pickpocketing.
Just like nobody would design an internet with no security and no funding mechanism, so the whole thing is rampant with marauding bands of criminals and the legitimate business parts are supported by pop-up advertising and spam.