I am quite aware that there are more than a thousand subgenres for music. So what is the use for them? Who needs them and why?
The sub-genres exist because someone wanted them to exist.
This is really a specific case of a much more general question of why people put things in categories in the first place. It's a deeply rooted human trait, with applications far beyond just music theory.
We have genres because we like to be able to capture complex things in a small number of words. When we are told "Hey, you should go listen to band XYZ," actually taking the time to go listen to them can be very, well, time consuming. If we value our time, we want to get some sense of what we're about to get into, so we ask "what genre of music do they play?" We can then file the recommendation to listen to the band alongside that one or two word genre, permitting us to prioritize. I'm not about to waste my time listening to some new orchestral piece when my house is noisy. I'll save that for when the house is quiet and I can appreciate it properly. Likewise, the latest thrash metal is probably not what I should listen to right before my wife and I go off for a romantic dinner.
The raw number of categories we create is a side effect of this process. Some people feel their music is too "out there" to fit into an existing genre, so they seek to define their own new genre. Other times it works the opposite way: someone wants to call their work as part of a genre, but the music snobs refuse to let them.
We also see more genres form when people want different types of categorization. To pick a trivial example, if I like music with a fast tempo rather than slow, and you like music with a full orchestra rather than just a few instruments, neither one of our categorizations is complete. We need something more, like "fast orchestral music," and thus a new genre is born.
Genres live and die constantly. They're fickle things which float on the backs of our own obsessions with categorization. The reason there are so many subgenres of music is because there are so many people out there actively keeping those sub-genres alive.
An interesting comparason can be made in the movie industry. Netflix famously handed out the "Netflix Prize" to anyone who could use their 5-star ratings as input to help predict what movies to recommend. BellKor, the winning algorithm, identified movies on 50 distinct dimensions. That's not genres... its dimensions. Each "genre" of movie was identified by a string of 50 numbers! Trivially, if there were only two valid values on each dimension, that would qualify as 1,125,899,906,842,624 sub-genres! Woof!
No-one needs them.
It's man's proclivity for pigeon-holing, which in recent years - & given so little movement in popular music in the past couple of decades - has seen rise to finer & finer delineations between genres that really anyone could just lump in together.
If it continues, we'll end up with just one pigeon per hole, rendering the entire exercise more obviously pointless than it is at present.
BTW, this question is entirely opinion-based, but I just thought I'd get my opinion in first ;-)
It's probably true that no individual will 'need' a thousand or more subgenre labels. Any given individual probably talks about, searches for, and thinks in terms of, a far more limited number of genres.
However, the number of labels 'out there' is the superset of all labels that have gained more than a certain amount of cultural currency - simplistically speaking, it's all labels that are used by anyone. You may not use or need most of them, but for most of the ones you don't use, there's a group of people who do.
Of course the whole idea of genre labelling has a great many deficiencies. In some spheres of activity, they've actually started to fall out of use - e.g. computer databases can now group similar music by direct measures of sonic similarity, rather than relying on a textual label.
However, people like to talk, and haven't yet come up with a nice concise way to answer the question: "what kind of music do you like?" without using genre labels. As long as that's the case, the number of labels will only continue to grow!
Remember that a genre label potentially needs to condense down a great number of characteristics to a single, memorable, descriptive name, so given the number of axes of variation possible, there's clearly potential for a lot of different genre names to be generated.
Because music is mushy mushy feely feely while computers and systems are rigid and strict.
This goes far beyond computers though. Any system where we try to categorize a thing as only one category, gets messy. Computers just allow us to do this with music in a more wide spread manor.
Is an Insect, Ant, Fire Ant, and probably more.
Going the other way,
It's an insect, but it's not an Ant.
In the same way
You need something more. Maybe you really like the first example, but your not in the mood for the last. So how do you filter those down.