Tips! How to roll rear wheel lip

At a risk of sounding stupid, what is the purpose of rolling the wheel lip like this? Is it for clearance issues, or simply just for looks? I apologize for my ignorance, but I'm still relatively new to all of this. Thanks in advance.

It is mostly done to allow you to run a wider tire, it also removes that sharp inner lip that would dig into your tire side wall if you are doing aggressive cornering, etc.