Why holes are put in a plant pot?

The holes are there to drain off excess water. If the planter doesn't have holes in the bottom, it acts as a pail, pooling water at the bottom. This makes the plant roots wet all the time. The roots of most plants can rot if submerged in water all the time. This can kill the plant, as would not enough water.

In hydroponics, they grow the plant in pea gravel and have the nutrition spray on a continuous off/on/off cycle. Growing plants this way allows them to control the quantities of the nutrients being fed to the plants. This also allows the plants' roots to dry out some during the feeding cycle, which is healthy for the plant; if not allowed to dry too much.