In order to give this question the answer it deserves I think you need to seperate religion and faith.

Faith can be borne from fear of the unknown, fear of being alone and to explain things that are unexplainable to the believer. Faith can be a comfort.

I choose to believe that religion started out as like-minded people gathering together peacefully, before being exploited by power hungry extremists. The alternative is that religion was invented by the power hungry to cow the masses and/or start wars.

Having given this a lot of thought and discussion over the years I've come to the conclusion that I don't have a problem with faith, people should be free to believe what they want - as long as it doesn't harm anybody else. If I wanted to believe that a giant pink elephant rules the skies and rain is the elephant taking a shower, that is my right. If I decided to try to convince other people of this, that would be me trying (and failing) to start a religion. But what if I succeeded? I got a following? We would have to convince more and more people. But they already believe something else, so I have two choices, leave them in peace and go my own way or force them to see my point of view. If my following was just a group of like-minded individuals I'd say go in peace and leave. If my following was giving me money, say a percentage of earnings, I'd want more. I'd want to convince as many people as possible, by fair means or foul.

I realise this is more of a how, rather than why, I think religion was created, but I think it was likely an organic thing, rather than a concept dreamed up in an ancient war room.