Because it's easy to measure and because skinny (low fat AND low muscle) people live typically longest.
Considering how general it is it ain't that bad. If you're athletic you probably already know better than to rely on an overly simplified measure like that (a 3% body fat bodybuilder can be considered extremely obese on the BMI index)
So yeah, it's bullshit, but for the mindless masses it has some use (waist-to-height ratio may be a slightly better general measurement)