The stated reason is to reduce file size.
And I would be wrong; this guy found that gzipped minified text can be 50% smaller than the original gzipped file: http://stackoverflow.com/questions/807119/gzip-versus-minify
And I would be wrong; this guy found that gzipped minified text can be 50% smaller than the original gzipped file: http://stackoverflow.com/questions/807119/gzip-versus-minify