In my dojo we have a separate advanced class for just the upper ranks so some technique is held back until we feel that the student is ready for it. There are a couple of reasons I can see for having ranks. One is that a lot of people need some form of structure, to know where they stand compared to others. Right or wrong that is just how some people are. Second, some need to have something to give a sense of accomplishment or improvement. Improvements in aikido can be so minor that they person may not notice but can when compared from one test to the next. I always try to refer to improvements from prior tests in test evaluations. Another reason (and I am not saying that this is a good reason) is that many dojo use kyu testing as a way to bring in money as they charge testing fees. We are lucky at our dojo not to have to pay testing fees until the dan ranks. That being said I am not convinced that I like the testing process myself but it does give some sense of order.