I think it is important for children to connect the dots, and reading activities do exactly that. The story goes with the illustration and if they do activities based on the book, then they can remember the storyline and understand its meaning much better. It also helps them in learning how to read and write and recognizing sentence structure. So much to gain with such activities.
Everyone's answers so far have hit valid points, but I think there is so much more to reading than educational purposes. It is great bonding time, your tone of voice changes when you read and children seem to pick up on it and find comfort in the tone. It allows children to explore with their imaginations in a controlled and safe environment.
Brain development, language development, vocabulary development, imagination development, hand/eye co-ordination social connection and connection to parents. Let's face it, the world is so fast paced that often opportunities for connection with our children are missed. A good book will slow you all down so you can connect in a way which is not possible in any other activity. Am I book lover? YES, YES, YES