Party rounds usually happen because investor A is interested and invites B and C, who invite D & E, and the situation repeats itself over days/weeks. All along the way, the founder is able to angle for better terms (and price!) as investors realize they have less and less leverage.
By the end of the party, it looks like a waste since investors D, L and R were the best fit and could have covered the whole round themselves. But, what brought investors D-R to the table was everyone who came before them. We can't go kicking them out of the round now! So, everyone takes a group picture (Techcrunch announcement) and makes it sound like they're so cool that they've always been partying together; nobody needs to know that most of the people showed up at the end and can't really remember the founder's name that they used to get in at the door.
tl;dr: One important aspect of the party round is that founders get better terms and less stress by signing investors as they arrive at the party. To the founder, that may be worth it.
Thanks for another great blog post Sam, keep 'em coming!