The second reason is that you can get an id tag and place it on the collar. This means that if your cat gets lost anyone who finds the cat will be able to contact you.
An important feature of a cat collar is having a stretchy one that either is elastic or has a piece of elastic in it, or a breakaway cat collar so if your cat gets caught in a tree it will stretch and your cat will flip out of it.
Some cats take to a cat harness and are quite happy to walk around the block with their owners. Cat harnesses can also be a particularly good tool to get your cat used to a new backyard without them running away.