I believe it acts as a check to make sure that the class is well taught, and the questions of an appropriate difficulty level.
If every student receives an F for a 40% correct (and they all only get 40% correct), a curve normalizes that. Students who understand the material as it was presented and tested better than others receive a higher grade.
Makes good sense to me. The problems arise in the Harvard situation, where nobody is curved down. If you down curve inflated scores downward, then a curve only serves to inflate grades and is less useful.