Your domain name is your brand. It’s the first thing a customer sees when they find you in Google. That’s why it is important to protect your domain from people who would want to exploit it.
Domain names are not much different from business names. If you were one of the founders of McDonald’s, you would not be too happy if someone opened a similar business called MacDonald’s. If you are setting up an online business, someone can use another extension of your domain name to essentially exploit your brand in the same fashion or sell this domain to someone else who would.
Purchasing the other extensions of a domain name also helps in case someone types in your domain incorrectly. For example, if your domain is www.example.com and someone types in www.example.net, you can direct them to your site seamlessly by pointing the .net to the .com site.