It stops a lot of people from even attempting to challenge them, and just do what they want without question, which has many advantages. In some situations, it’s even legitimately necessary. It’s also prone to abuse of course.
In order to keep this kind of power, it’s necessary to demonstrate from time to time this power exists and will be used, since if people start not being afraid of having their lives ruined if they challenge said power legitimately, they also stop going along with demands from those in power unquestioningly. And a lot of the ability to destroy someone for whatever reason (including legitimate ones) depends on that unquestioning compliance.
You can think of it as a form of ‘bend the knee’.