It also has peacetime applications. By restricting the burrows in which dwarves work, you can trade some of the silly running around they currently do, for a more specific work pool. Say you have two craftsdwarves, and an order goes in to make bone bolts at Burrow A. The craftsdwarf at Burrow A is just finishing a drink; the one in burrow B, across the map, is idle. As it is now, Craftsdwarf B will run across the map to do it, even if Craftsdwarf A is long finished his drink, and idle, by the time B arrives. With burrows in place, Craftsdwarf B won't even look at Workshop A, and A will finish his drink, get to the workshop, and churn out all the bone bolts in less time than it would have taken B to even get there at all.
This makes it practical to have several sub-fortresses on your map that might only be connected overland; you can concentrate on digging out quarters and workshops and hunting for valuable resources, rather than carving out a lengthy tunnel between the two, and yet still not worry that dwarves will be constantly running back and forth. It only works at that ideal level if you make the burrows self-sufficient - but you could also have specific inter-burrow haulers, and assign war dogs to them, so that they don't get eaten by the groundhogs.