If I'm wandering around a class of forty or fifty people correcting them , it helps me to be able to have a quick glance at their belt , coloured shirt or badge to tell me how advanced they are in the system. This way I can correct or demo techniques from the curriculum that are appropriate for their skill level rather than waste time listening to their whole life story about where they are exactly in their training.
Sure, even unranked styles organize their curriculum in sections or levels. A student may not have a belt but may tell their teacher they are working on drills in Section 3 or something like that.
From a students perspective, especially a new student, it helps to know who you can go to with a question (you can always ask a black belt, etc.)