Imagine having this conversation everytime you paired up/ lined up/stood in the food queue with someone new at a seminar in order to discover who gets to attack first, then having a kyu/dan system makes perfect sense.
A lot of people don't follow any particular order for who attacks first anyway, and it doesn't seem to matter... I know at seminars I have almost never had conversations about what rank people are (the one exception is curiosity about who'll be taking tests at the seminar), so basically unless we know each other the only formal distinction that's to be had is white belt vs black belt.
I can see benefits for having more detailed ranks than white/black, but for me that isn't one of them. I can practice perfectly fine with people and we can learn from each other without ever knowing each other's rank.