There are two main reasons why you care about protecting your files from other users.
The first reason is that you may wish to protect the contents of your files from others. You may consider the contents of your files private, and you don't want other to be able to read or modify the contents of your files.
The second reason is that if others can modify your files, they can obtain access to your account. For example, if a malicious user has write access to your home directory, they can create or modify your .rhosts file to give anyone unlimited access to your account.