Connections were much slower back then. Sometimes you'd go a few seconds or more without anything happening on the screen. The loading animation was nice so you knew your browser wasn't frozen.
It's a loading indicator. A far more obvious one than the tiny spinning circles that seem popular today.
It makes sense; you want to make your app so that even the tiny spinning circles aren't even visible. I added a feature to a webapp in a previous project that would only start showing a spinner if loading a page or section took >1 second. If it's any slower you'd see a flashing spinner, which is not very nice.
The Netscape loading logo is the one I feel very nostalgic about, if we can have animated gravestones when I die, that is the one I want to have on mine https://imgur.com/a/G6quKu8