Well, it is awfully cute… (That’s a survival advantage.;))
I am dubious about groman’s theory because they do it to a sudden loud noise (or, I think, anything that startles them) as well as to falling.
Anyway, I question the implication in the Wiki article that it disappears completely in normal older children and adults. It may get overlain by other behaviors, but it is recognizably akin to things adults do when startled. When I noticed that my baby daughter did it (at which time I had no idea that it was a scientifically recognized reflex) I dubbed it her “good gracious!” gesture, because it did indeed look like a stereotypical adult expression of surprise. (Once, when she was falling asleep in her high-chair and there was a sudden noise, she did it in slow motion.)
My WAG is that its function is communicative. They are telling the parent that they have been surprised rather than doing anything directly about it themselves. (In my experience with my children, it was by no means invariably followed by crying, which conveys a somewhat different message. Crying means they want you to do something to make them feel better. The Moro/startle gesture is simply telling you that they have been surprised.)