So many comments about how it is meant to artificially extend gameplay, or motivate the player to continue.
Could it not be as simple as the game cartridge only holds 1MB of game data max, and restarting the level from 0 when you die uses less valuable storage space?
Also, depending on what you're searching for, this could occasionally provide results which were not what you were expecting. Sometimes better than what you were expecting, sometimes much, much worse.