It’s really a means of simplifying & cost reducing the machinery needed to get a vehicle to space, although not necessarily “orbit”. It can replace a rocket stage, and unlike disposable rocket boosters or “stages”, it remains on the aircraft, and does not require the vastly complicacted pump & turbo-machinery of a rocket engine, like the shuttle’s. It has virtually no moving parts, and can be turned around by just gassing up.
Although it can’t propel a craft to orbital velocity or altitude, and rocket engines (engines that have their own oxygen) are needed above the atmosphere for maneuvering, even a “sub-orbital” flight has some very desireable characteristics:
From a civilian application, you could have a “sub-orb” aircraft that can do London-Hong-Kong in a few hours direct flight, say the same time as London-Frankfurt, or New-York - Tokyo in the same time as New-York Chicago. Those long, 12-15 hour flights are a huge pain for frequent travellers, even with all the comforts of first class and the attentions of beautiful & compliant Singaporean attendants. There would be a big market for such flights.
From a military perspective, the advantage is even more pressing. The US strategic bombers like the B2, because of their cost, “degree of secret-ness”, and the increased political difficulty of basing them in other countries, have now been based solely in the continental US. This meant 24 hour round trip flights for the crews flying missions in the gulf area, with multiple, tricky, air-to-air refuellings. Imagine a strategic bomber that could leave a base in Nevada, drop two to four 1- 2 thousand lb. J-DAM bombs on the other side of the world, flying at altitude and speeds that no known interception method, except perhaps anti-sattelite weapons, can touch, and return to base in 6 hours. I can guarantee you that such a scenario is giving someone in Beijing heartburn right now…
Another “political” advantage is that if you’re flying in space, technically you’re not in anyone’s “airspace”…
Hope that helps exlain the need, although it may not satify the “baby-medecine-not-bombers” crowd…