They replaced the home button with a digital indicator. You need a physical power button that'll work with the screen off so you can turn the phone on. Physical volume controls allow you to change the volume in your pocket without looking at your screen, and also allow you to force restart the phone.
Not sure why the mute switch is still physical, but I don't mind it being physical (although it does get dirty over time).
So, if we need to do something without looking at the screen, we should keep hardware buttons, right? And if we don't need that, if we are looking at the screen _with_ buttons already, then hardware buttons are redundant.
Except in the case where the stupid thing freezes and you can't interact with it anymore, then you need a physical button to smother it so you can start it back up again.