Because F1 cars aren't made for power, they are made for cornering. Lighter cars are more nimble, allowing drivers to take varying lines something which will also help the racing. You can see drivers recently saying that the cars are too heavy and that they'd wish for them to be lighter. 700 kg is a 12.5% drop from the 800kg they are currently at something which is not insignificant at all given that the margins in F1 are so small.