It's easy for use to forget what actually happens in the 'real world' when we spend so much time in the 'tech world'.
The cloud is extremely powerful in that it bridges the gap between devices, and users. if I have a photo on my phone then why cant I view it on my computer without hooking up and importing. Or if I have photos taken on my DSLR, why then cant I share them remotely from my phone to others whilst I'm out and about.
iPhoto was part of the iLife suite that were standalone apps to manage the different multimedia demands of your life, mostly from non-Apple digital cameras. It was optimized around editing and organizing your photos. "Photos" on iOS was a barebones app required by a device where camera functionality is built in, intended primarily to manage photos created by the iOS device. Over time both of the apps have borrowed features from each other and grown together until it made sense to converge into one app.