The biggest problem in a compressed air system is moisture. Compressing the air heats it and as it cools in the tank and lines moisture condenses out. This gets pushed through the lines and end up in your tools causing damage. Water ruins paint jobs if it gets to the gun. Water clogs sand blasters. The more the compressor runs, the more water you're going to get. And it can be a LOT. The more you can catch at the tank (tank can be purged regularly) the less you have to deal with at the tool end. A smaller water trap at the point of use may catch the rest.
Air tools need lubrication and having a lubricator on the tool end extends tool life. You don't want oil in the air system because it will contaminate other processes that don't need it - painting, sand blasting, etc. So one good way to lube the tools is to use a water trap/lubricator at the tool end of the air connection.