Reasons for spread out "formations":
Looks freakin' cool (draw pretty shapes with Shaman healing)
Manage characters (trade items, cast buffs/heal if you're a clicker, mouseover macros)
Positioning (gets healer quickly to the rear of the party, dps'ers in the middle, tank out front, etc.)
Makes all characters stop following the main.

It helps to have another layer of control for your party.

Read this.