Only thing I could think of is that you can transfer it from one computer to another quickly. And you don't need to create an account (like say if I transferred it through DropBox), just type in a password.
If you haven't, well, people should use that other service instead of this one.
Either way: I'm still totally unclear on why anyone would allow a server to encrypt files for them. I don't even reach the question of whether it's possible to do it securely, because it seems like such a weird thing to want.