Many people do not have the resources to go through the formal adjudicatory process. The atmosphere is more congenial. Everyone can be satisfied. Compromises can occur. Administrators can apply discretion and make individualized decisions.
Disadvantages exist as well.
Discrimination can occur. People that do not really know how to work the system can get taken advantage of. Power players obviously have an advantage. There is no guarantee of openness. This is closed-door government.