What purpose does the lining inside sheet metal duct serve?
I assume JPhi1618 is referring to thermal insulation with his/her comment, which is correct. Especially in the case of long runs, much heat can be lost or gained en route due to conduction through the duct wall. Obviously this reduces efficiency and hampers environmental temperature control. 

In other cases it's about sound reduction. Fan hum and howl, along with the noise of airflow itself, can be problematic. 

Drawbacks to internal insulation are dust and odor. Obviously they're more likely to accumulate on rough, porous surfaces, and cleaning is less effective as well.