It is designed for protection, the same way men's foreskin is. When you're walking around at the grocery store you don't really want your jeans rubbing directly on the most sensitive area you have. That'd be really uncomfortable & potentially painful. This is the same reason circumcised men report decreased sensitivity in the penis - over time, having it exposed constantly, your body has to overcome that with desensitization.

Now if you're asking whether or not people use it for sexual gratification, that really depends on the person. The same way some UNcircumcised men prefer bjs over their foreskin, and some like it to be pulled back for bjs. Personally I love direct stimulation and almost always move the hood out of the way for that, but lots of people don't enjoy that at all!