Simply - if you are working only for a single customer within a certain time period/receiving the majority of your income from a single source, you are considered to be an undeclared employee and not really a freelancer (= business) - and that exposes both you and the company to big fines. It is not the only criteria for this but a pretty large one.

Both France and Germany have such laws but other countries do too.

The point is that many companies would otherwise stiffle workers by forcing them into becoming freelancers because then they don't have to provide legally prescribed healthcare benefits, paid vacation, contributions to pension, etc. that employees get.

And at the same time those workers don't have really the position to meaningfully negotiate their contracts to e.g. include extra pay for that missing vacation or healthcare/pension insurance. I.e. we are not talking about IT consultants but delivery drivers, cleaners, etc. - low paying jobs.

I.e. Uber's business model - and that's exactly why it was banned/had big problems in many EU countries (in addition to completely flouting the existing taxi service regulations).