It's been around way more then the last year, back when the TSA started screening bags I thought for sure they would be a dying business, but they managed.

The most valid reason I can think of to wrap luggage for me was when we were on a cruise leaving from San Juan. They picked up the bags at the airport to make it easy for people to get to the port. In the afternoon it started pouring. When we got to the pier, there were all the bags from everybody on the ship all lined up waiting to be loaded, in the pouring rain. When there is any chance of that we will put a huge garbage bag inside the bag to line it, that saved our butt that day, but many people ruined some stuff because it got wet, colors ran, etc.

People do it to keep the bags from popping, to keep them dry, to know fairly easily if somebody got into them or not, to keep their expensive bags clean, and to help identify them on the belt. I don't get those who wrap secure hard cased bags, but some people do.