For plucked instruments, besides ease of use, it adds clarity and sustain. Orchestra AFAIK only has Pizzicato where that would matter.

Frets make chords possible.

You only have to put your finger somewhere in between two frets to get a particular note, so you can play more than the tiny handful of chords that can be played on something like a violin.

There are non-fretted guitars but they are rare, and I think early banjos were not fretted.

Sustain

in college a good friend was a very good Oud player (plucked, some number of strings.... more than 8? I forget), and it definitely sounds different from guitar due to less sustain. Clearer notes and chords, but they don't linger as long or loud.

Edit: apparently it's 11 strings? ok.

What's the difference in sustain time between a cello played pizzicato and a plucked guitar string?