Need help in understanding the mosfet reverse polarity protection circuit
Why is it connected in reverse direction (because if you connect other
way also it works)?

If you connect it in the &quot;other way&quot; the bulk diode will conduct on a reversal of the supply thus rendering its main usage (a reverse voltage protection) as completely spoiled.

The overall current is going through the body diode (because in
p-MOSFET current flows from source to drain). How is it helping?

Actually not, because the MOSFET is switched on, the MOSFET channel resistance (milli ohms) is the main conductive path.