In addition to creating a finer overall grind, this also emulsifies the meat and fat to some extent. When making sausage, you do this on purpose to achieve what is known as the “primary bind,” which is what keeps sausages juicy as they cook (if you have ever made or eaten a dry-as-sawdust yet somehow greasy sausage, lack of primary bind is the culprit). I make my meatloaf, kofte and meatballs this way, although usually I only grind half the meat finely (usually along with aromatics/vegetable filler) and then hand mix it with the coarser half to retain a medium overall texture.
On a related note, contrary to a lot of chef-y advice, I have started working my ground beef pretty aggressively (by hand) when making burgers in order to approach the primary bind stage before shaping into patties. I find that when using a fatty grind (75/25), it really helps the burger retain a juicy texture, just as it does with sausage. You have to be a bit more careful not to go too far with a burger because it can get tough, but as long as you are doing it by hand there isn’t too much danger.