Why do universities have a reappointment process before tenure?
It is not totally pro-forma; I do know of examples where the contract was not renewed, though it certainly does happen less often than a tenure denial.  I think the standard is basically "is it reasonable to hope this person gets tenure?" 

I think the purpose is to try to get people ready for their tenure review by having a look at their case early, and trying point out where they are doing OK and where they could do better.  If nothing else, it focuses the minds of people in the department who might have let things slide otherwise.  It seems pretty logical to me.