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Jellyfin and others transcode some videos to a more streamable format. Not important if it's already a good streamable format, but if it's some older file, it might not even be streamable (like AVI, and WMV). Those situations are where transcoding is necessary. It also comes in to play when the bitrate needs to change, like trying to watch a high bitrate video on old hardware that cannot handle it (like an old chromecast). It's nice when the server can just transcode the video and send a less heavy or more compatible stream.
Hardware acceleration for the transcoding is simply more efficient these days. Most CPUs for the last decade can do software transcoding of 1080p without much issue (if that's all it's doing), but get multiple people watching older videos or some really high bitrate ones and hardware acceleration will become a tangible benefit, too.
Your situation only works for video formats that are streaming-friendly, meaning all the browser has to do is feed the stream of data to a video player, and it Just Works. The media player doesn't need significant chunks of the file to start playing it, so as long as the connection is fast enough, it's fine.