I get accused of focusing on the unimportant stuff a lot. You can go back and see my opinion of role-players vs. gold farmers for more on that. A huge part of why I do it is simple - It makes everything else easier!
If you wrote the history of a small town you were creating and it went like this: First there was a mill on the river at Point A, but that place kept flooding, so they rebuilt the mill at point B. For a while the bridge at Point A was the only one, so everyone kept going by the old mill anyways. Eventually they built another bridge and then the Duke decided to put a wall around the community that had sprung up around the new mill.
Many people would find this pointless, after all, are any of the players going to ask you for the history of the mill? No, but now you know the name of the major roads in the area - Old Mill Road and New Bridge. You know there are two ways to get across the river - the new bridge by the town and the old bridge in the low country. The old bridge is probably in disrepair and may flood from time to time, but the new bridge probably has a toll.
Why is the town here? Because the mill found a good spot to harness the power of the river, and then they put up a bridge. This most likely implies that the river is narrower here, and therefore likely faster. What else do we know about the region because of these few lines of history? Well, that they have been growing grain here for a very long time, otherwise why would you need a mill? You know that either the mill or the bridge is considered strategic to the Duke, or he wouldn’t have bothered to build a wall. You know the river floods, but not so bad at the town.
By writing just a couple of lines, the rest of the stuff is really easy to figure out. Please understand that when I’m advocating GMs play as role-players, I’m not suggesting you need a 600 page document to run your world. In fact, if the doc is too long, it impairs your ability to run your world. But by having short notes that seem unimportant, you have the sparks you need to run anything off the cuff -and that is where a good GM needs to be!