Because the economic relationships between libraries, publishers, and authors was established on the basis of physical books. And that relationship mostly works.
Ebooks break that model, so the solution is to treat ebooks like physical books.
Probably to limit the number of simultaneous rentals, handle people forgetting to return or delete books and preventing them from wandering off to others. Win for the libraries if the cost of the service < handling all those dead trees.
> What is it's purpose? What problem does it solve?
Patron wants to read a book. Library wants to let them read a book. Publisher wants to get paid. Library doesn't want to buy a whole book for the patron.
But to their defense, I don't know what the best alternative is.