[Someone]

"It cleans and disinfects shower, bath, and washing machine water so it can be reused for toilet flushing, washing machines, the garden, or swimming pools”

⇒ This produces “greywater"(https://en.wikipedia.org/wiki/Greywater). That can also be done (and, I expect, more economically) in a centralised location, but using that water would require laying a second water main to all houses.

An argument in favour of local treatment also might be that it makes it harder/impossible for users to use the wrong kind of water (drinking greywater or using “blackwater" where greywater would suffice)