It gives you a chance to try the app without buying it, and convenience of buying full version without having to go into play store to download new version, and also deleting the "demo" version.
For example if you sign up for a free MMO trial, you can either cancel it or just buy subscription - you don't need to re-install the game and reapply any customization you have done.
Also if it's a kid-game, and your kid is small, they might be super happy with the one or two free levels, and you wouldn't need to upgrade to full game.
