Your answer is in your title - Switching.
Running all of the video sources into the receiver is convenient because it allows the receiver to do all of the switching. Audio follows Video so when you switch the video, the audio switches too.
An example may help to make it clear:
Case 1: Video directly to the TV:
- DVD player video to TV input 1 and audio to DVD input on receiver.
- Cable box video to TV input 2 and audio only to Video 1 input on receiver.
To watch DVD, you have to switch the receiver to Video1 and the TV to input 1. To then watch cable you have to switch the receiver to its video1 input and the TV to its input 2.
Case 2: All video and audio to the receiver:
- DVD audio and video to receiver DVD input.
- Cable box audio and video to receiver Video1 input.
- Single video cable to TV input 1.
To watch DVD, you change the receiver to its dvd input and you get audio from the dvd player to your speakers and the video appears on the TV - you didn't have to change the TV input. Switch the receiver to its video1 input and again you have audio from the cable box to your speakers and the cable video on the tv without touching the tv input.
You can automate case 1 with a universal remote with macros, but it is still much more convenient to let the receiver do all the switching. The argument for video directly to the tv is 'picture quality' with many believing the direct connection will look better, but the receiver essentially just passes the video through and doesn't degrade the picture quality at all.
'Upconversion' in either the receiver or player is all the rage now and the point is to match the resolution of the source video to the resolution of the TV (only applies to fixed pixel hdtv - lcd, dlp, plasma, etc - not crt). The TV will do that anyway so it's a question of whether the receiver or tv can do the better job of upconverting.