Retweeting is bridging the graph with an enticing edge to follow. If Twitter was a purely social network (without the information flow), the practice would reduce to name-dropping.

To share good content from people you follow to your followers

Often retweets contains links to things that matter, or ideas that should be spread, or funny things. It's the same reason people quote and link on blogs etc.

retweets are a community attempt to make up for the fact that "favoriting" something on twitter is largely ignored and hidden and isn't (or at least wasn't traditionally) something easily accessible from the website or as part of someone's regular list of tweets. Favorites are more accessible now to other people, but they don't have the prominence that they should have.

You retweet because you want to say what someone else said.

With my startup, our stories are retweeted 50-100 times a day. They're retweeted because our followers want to share the news they got from us with their own followers.

Sometimes someone says something that you might agree with, or you think your followers might agree with it, so you RT.

For the same reasons you might link to some other website from your blog, or submit a link here.