It also shows you the "face" vs. the "back." The smoother side of the border usually faces out on the shelf. That matters because the loops on one side are often cut slightly shorter for faster drying.
3. It absorbs better — by absorbing less
This is the counterintuitive one.
The dense flat weave does NOT absorb water. That's the point. When you dry your face or hang the towel, the border acts as a "drip stop."
Water wicks up the loops, hits the tight border, and stops. Without it, water would travel to the very edge and the towel would stay damp longer, grow mildew, and get that sour smell.
High-end Turkish and Portuguese towels actually weave two borders — one near each end — to create a "balance zone" so the towel dries evenly when hung over a bar.
Bonus: the hidden history
The dobby loom, invented in the 1840s, allowed weavers to create that flat pattern without stopping the machine. Before that, towels were finished with hand-hemmed edges that unraveled.
