Well, I can throw in my two cents.
First the concept of the IDP started after WW2. The main need was to agree on whether I as a holder of an Iowa Drivers license can drive in other countries. So in 1949, a number of countries agreed that if you hold a valid drivers license in one country, the signatori countries would honor that drivers license in other countries. Of course all countries have many odd regulations about licenses (permits, training licenses, restricted licenses, etc.) so the IDP was developed to address whether your license is approved for driving under the terms of the convention. So what does the IDP signify?
- It is a Notarized testament that your license is valid in the country of origin and meets the minimum requirements under the convention agreement. Basically it ensures that your License will be honored in member countries.
- It organizes pertinent information into a standard format with fields labeled into several languages so that a "Native-Only" speaker can figure out what is what.
The convention did allow that the task of Notarization could be delegated to organizations like the AAA or their equivalent in other countries, but in some cases, Embassies and other Governmental agencies can also fulfill the need.
Do you need it? Well, it is required in many countries, Rental agencies may not care, even some Police may not care, but generally it is useless (like your drivers license) until you need it, and when you don't have it, it can be a big problem. You are paying thousands for a trip, hundreds to rent a car, pay for insurance, pay for gas, but question paying $15 for an IDP?