It helps shield the detectors from cosmic radiation, shields people living on the ground from radiation produced by the collider, and helps with vibrational isolation. But those are just nice bonuses.

The most important reason is that there are already lots of people living a nice small-town life on the surface, and erecting a giant, dangerous ring would wreak havoc. It would require land rights, cut towns in half, split highways, trigger lawsuits, and probably end up costing more money and time than just digging.

I believe the tunnel contains the "track" that allows the particles to whizz around and be accelerated to very high speeds and eventually smash into each other, hopefully causing them to smash apart and reveal their inner contents.