It gives you the ability to say what you mean. By having several words at you disposal for describing an event or emotion, you can be explicit when sharing their ideas and opinions.
It helps you understand what other people are saying and what you are reading. Vocabulary is the foundation for comprehension. Unfamiliar words become holes in the text, preventing you from completely understanding what you have just read.
It bolsters your ability to grasp ideas and think more logically. The greater number of words you have, the more you can interpret ideas from others, and express your own ideas.
It boosts your power of persuasion. Having a rich vocabulary will help you communicate in a more engaging way. Relying on one or two words to describe an idea will be repetitive and not as persuasive, as relying on a vocabulary of 10-15 similarly descriptive terms.
It helps you make a good impression on others. How articulate you are constitutes a big part of the impression you make on others.