The short answer is insulation. The temperature of water will never rise above its boiling point, so baking a custard in a water bath ensures that the sides of the pan stay at no more than 212F or 100C. Baking in a water bath will automatically increase the bake time since the sides of the cake will take longer to set up. When baking a regular cake, the sides set up first and form a golden brown crust all around. This is absolutely not what we want in a cheesecake. We want a smooth creamy texture from top to bottom and from edge to edge.