Why refresh rate is needed in a passive-matrix LCD
LCD crystals want to align themselves along the electric field, set by the voltage between electrodes. Each LCD pixel is like a small capacitor.
When potential is set during scanning of the matrix, the applied voltage does not stay charged forever in the tiny capacitor, it slowly leaks and must be refreshed like in the case of DRAM cells.
And the electrodes will degrade when DC potential is applied, so the electrodes must be driven with an AC voltage that has average DC voltage of 0V.
So constantly refreshing the LCD is needed to alternate the polarity and to keep the pixels on and off by keeping the electrodes charged or discharged.