Why is luggage required to be loaded in containers?
The central cargo hold is usually pretty big and open, if cargo was placed in loosely then it might shift in flight which can cause the center of mass to shift or damage the walls of the hold. Putting them in containers and fixing those down will prevent that.

The containers can also be weighed before hand and their position set to ensure the center of mass ends up where it should be. With loose cargo the pilot would need to rely on the intuition and experience of the loaders to ensure that they don't put all the heavy stuff on one side.

Loading loose luggage requires that the loader in the cargo hold handles each bag while stacking them. The hold also needs to be full enough that the luggage can't shift around.

The smaller forward and rear cargo holds (or on smaller planes) can still accommodate loose luggage (or more precisely they are too small for the containers to fit). They will also have netting to provide barriers against shifting.