Tapping in different parts of the text box, or dragging the finger in the text box, allow a lot more precise control than what one can easily do by dragging the space bar in the iPhone keyboard, much closer to what you can do on a full computer with regular keyboard and mouse.

The difference is especially noticeable for tasks like editing / deleting / selecting specific parts of long URLs, and on smaller phones where the iPhone space bar is smaller than on larger phones.