Because much of what the US government does, including paying most of its employees, is funded by annual appropriations, which are only valid for one particular fiscal year. As soon as that fiscal year ends and a new one starts, if new annual appropriations haven't been passed for the new fiscal year (or something else that provides funds, like a Continuing Resolution), all those things have to stop because there's no money to fund them any more.

There's no Constitutional requirement for all those things to be funded by annual appropriations; the only restriction the Constitution imposes is that no appropriation "to raise and support Armies" shall be for more than two years. It's just how the budgeting process has evolved.

> If there’s no agreement just use what was already law before

That won't work quite as you state it because "what was already law before" expired at the end of the last fiscal year.

A Continuing Resolution is an attempt to extend "what was already law before" for some period into the new fiscal year (in the case of the one passed by the House in September that was until November 21). But it still has to be passed as a law--it doesn't just happen automatically. Congress could put something in place to do that (since there's no Constitutional bar to that--see above), but they never have.

https://en.wikipedia.org/wiki/Loss_of_supply

Usually it is interpreted as a loss of confidence in the government, resulting in the formation of a new government or the calling of an election. Potential loss of power is a pretty good incentive for a government to find a sensible solution.