I think it's mostly book-keeping, but it's also somewhat tied to friendly-fire IIRC.
Basically the game wants fairly loose rules as to how squads move but still wants to maintain coherency in a purely game/organisational sense. (That's also why only elites and vehicles get individual actions: mostly, it's to keep the game quick and coherent, but it also reflects superior control and coordination.)
It has real in-game effects: unit perimeter can allow a lucky or cunning commander to really disrupt his opponent by pinning an advance unit, whereupon following units will have to divert around it. For example, I rushed SI ahead of my PI; the SI took a "cower" individual morale test, and my cleverly screened PI ended up taking a LONG stroll to get around the situation.