I believe that linking became important when programs got too big to compile within the memory limits of the computer. Then you had to compile portions of the code into separate object files, and then "link" those object files by reconciling the identifiers with their addresses. Without having to haul everything back into the compiler at once. It also meant that portions of a program didn't have to be recompiled if they weren't ever changed.

This wasn't the only way to skin the cat. Multi-pass compilers were another way.

Relocatable code could make more efficient use of memory, for instance not having to worry that your object code would end up crossing a page boundary after linkage.