Why to use Kuikae rule in Riichi Mahjong?
Kuikae prevents the following:


People calling for a cheap defense against an opponent's riichi. If they have discarded a 6 and you have 789 in your hand, without kuikae, you can call the 6 to discard a 9 from an already complete run in your hand.
People scaling their hands towards tanyao/chanta by directly discarding the tile on the other end.
People scaling their hands towards sanshoku, trying to align runs like 456x, 567y, 678z by calling 7x and 5z to obtain 567x, 567y, 567z.
As well as some places (rare, but it does exist) that allow people to call and discard the exact same tile. 5+67, discard 5... or even 5+55, discard 5.


Standard penalty for breaking this rule is a dead hand, in most competitive leagues as well as in jansô environments.

EDIT: For those reading, we talk about kuikae, but in the sense the the rule is a restriction on what can legally be done (making these cases illegal moves), so an OFF setting, as opposed to an ON setting. Kind of like the kô snapback ban in go, or rules relating to repeated positions in chess/shôgi.