Here are a few reasons off the top of my head!
Stimulates the imagination
Develops fine motor skills
Encourages communication of ideas
Helps children make sense of their world.
Here are some great links if you would like to read more.......
1. Kiwi Crate, 10 simple ways to raise creative kids
2. The Importance of Play, by Bruno Bettelheim, 1987
"The way a child wants to play is often very different from the way his parents want him to. The child, however, knows best"
3. Don't Go Back to School: How to Fuel the Internal Engine of Learning,
by Maria Popova
4. 10 Ways To Boost Your Creativity, by Julie Plenty