Why do we think that this is a useful property?  Because the world does exhibit a large amount of locality, and is often hierarchically structured.  This, in fact, was one of the key points in Herbert Simon’s seminal essay “On the Architecture of Complexity”.  In fact, Simon continued to argue in that essay that, to the extent that the world is not organized in this way, we simply cannot make sense of it, so that this assumption is the only way by which we can deal with the real world.