Using the addon.xml does 2 things mainly.

1. Keeps your main sim folder clean. Using the xml allows you to install the product outside the main folder, keeping the main sim folder uncluttered and clean.

2. Allows for easier sim upgrades. When new updates come out for the sim, a lot of us usually do a full install of the sim. This means anything in the main sim folder will usually go with it. If its installed with xml, you can just leave the product untouched, and when you load the new install, it will be there ready to go, from the first load.