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Because there is a layer of UI/UX between the screen and "their box" that Apple traditionally hates. If there is an Apple TV with a screen (and I'm not saying there will be) then you can be sure the input switching madness, weird motion interpolation, iron-maiden remotes, and shitty setup experience will all be gone. If it ever comes to exist, it will exist to close that final gap between Apple/iTunes and your couch.

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That makes some sense.

However I would then argue that Apple should put all the 'TV stuff' (cable input, av input, etc) in the Apple TV and have that plug in to the TV. Added benefit of being way more portable/modular.

EDIT:

Actually I'm not sure that makes sense. It seems like Apple's goal is to get you consuming content through Apple. How would a TV be any better for that purpose than the Apple TV? With the growth of streaming video and the decline of cable it seems dumb to optimize for cable. The user experience would be for you to leave the input on the Apple TV all the time and do everything there -- tv, movies, iOS games/apps.

Basically because Apple wants to control the whole experience from turning it on to turning it off. Not saying that everyone cares about that level of integration, but if the past is anything to go by then Apple does.

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