To insure that it is located in a safe area and is not in the way of traffic or pedestrians. A valid encroachment permit is required prior to placing a dumpster in some counties.
This must vary from state to state. The State of TN does not require a permit. The dumpster must be placed on the property and not blocking the sidewalk. If your state requires a permit, it is just another was for the state to make money.
Mostly a way to boost your permit charges, but also to know what and where the refuse of your project goes, and is disposed of properly.
If the dumpster is placed in the street, there absolutely should be a permit.
Placement on private property is a scam to make money.