With group policies, it means that the insurance companies can do their actuarial work on the entire group in aggregate without having to have considerations about prorating based on certain individuals entering or leaving the policy throughout the year.
At least ostensibly. I doubt this actually happens. It's mostly just a way to limit administrative overhead for both the insurance companies and the employers.
Don't think for a moment that employers don't like the whole open enrollment system too. Even if they CLAIM it is a PITA, it lets them only have to deal with this work for newly-qualified employees, separations, and otherwise only once a year.
Either way, it's of no benefit only harmful to the actual consumers of the insurance. But since individuals aren't the customers, that doesn't matter.