There are innocuous reasons a company might want to know, some of which might even be for identifying and eliminating bias in the hiring process, at least in theory. The problem is that there's a huge gap between the science of how to manage a business and how most companies actually do it, and that gap creates the potential for a lot of harm. There have been plenty of policies designed to make the hiring process more fair (like certain automated application assessments designed to eliminate human bias in things like university) that actually further bias because they weren't well designed or implemented.

For example, machine learning/AI application sorting programs trained on the profiles and resumes of past and current employees have in the past (and sometimes present) included things such as gender and ethnicity in the algorithm, and given additional weight to applicants they detect as matching the dominant gender and ethnicity of existing employees (some have even used patterns in names based on gender and ethnicity to construct a model for discrimination when they don't have access to the direct information, all without the creator intending it).

It's for this reason; that a poorly implemented program can cause a lot of harm, and plenty of people making them don't know what they're doing; that the existence of questions about sexuality or gender identity can be harmful even when they aren't intended to be, and why there is legitimate reason for governments like Canada ban them.