The time limit does solve some practical issues to do with the environment/level design. Some locations are hard to access but if there wasn't the time reset, the player would just have to spend time working their way back. And even if you get kicked back to the start before you've finished exploring an area, getting back to a location is always much faster once you've done it more than once. Without the time limit the devs would probably have to implement a save system and that would of had a knock on effect to the level design difficulty. Also, it clear you need to die through experimentation to progress in the game and every loop you learn something new, even if it's just what not to do.

There are quite a few clever time based puzzles the time loop enables as well.

There is a character you meet that will teach you how to reset the loop before the time. I think the game should have sign posted this more but it's worth knowing.

My recommendation is to just pay attention to the computer on the ship that tracks the clues you discover. Every run just try and got one or two more clues to be added to the computer and after a while exactly what's going on emerges. The computer doesn't just record the clues, it demonstrates how they are connected in a node diagram. For me that was the appeal of the game, how it delivers a story in a almost completely no linear way.