This is one aspect. Another is the ease of simplifying making a great photo. A large portion of more advanced photo editing is just moving various sliders around trying to find something that looks nice (yes, i'm oversimplifying) .. but taking this concept and putting it in the hands of regular users at no cost allows people the ability to take even crappy photos and make them look nice.

Even before instagram allowed full size photos, I was using another app to allow the whole photo to be edited, and then cropping the photo after, and then printing them out. My entire apartment is decorated with framed photos that I edited slightly in instagram, but you'd never know because the edits are very subtle. (to be clear i never even posted these photos to instagram, just used the app as the editor)

If you've ever edited a photo in instagram you realize the difference between the end result and what you started with.

Giving what used to be only reserved for people with expensive software and fancy computers to regular people (and making it easy), is definitely a huge piece of it too.