One reason for the USR waypoint is when a change is made to fly DIRECT-TO someplace else, the FMS has to figure out how to get to where you want to go. It it can only create and display the updated flight plan starting from where the aircraft is now. How can the current position be added into the FMS? It creates a waypoint and calls it USR. If it couldn’t create the USR waypoint, it would only be able to create a new flight path from some other waypoint which really isn’t DIRECT-TO.
Another use is for identifying landmarks that aren’t in an FMS or there is a character limitation. For example, the “Statue of Liberty” isn’t in the navigation database. But users want to fly to it or fly around it. MSFS has graciously added a lot of POIs into its navigation database. When a pilot adds the “Statue of Liberty” to the flight plan, it is entered into a FMS as a POI with latitude and longitude information. If the FMS doesn’t have “Statue of Liberty” in its navigation database, it does have the latitude and longitude information. So it adds the POI as USR figuring the pilot wants to go there.
Not having the USR capability would cripple the GPS.