The gravel keeps the sides of the building from getting mud and grass on them. It also makes mowing easy- no weed whacking, just mowing. It's all about ease of maintenance.
The landscaping/grading where the gravel is has a slight downward tilt to it so the water runs away from the building. There is fabric (big box store grade) under the gravel. The boarder of the house is the same way, easy to mow, no shrubs and once a year I pull out anything growing. The boarder also has a slight slope to it such that the corners are about 4" below the mid sections, also to help drainage. In the front, there are 1" pipes with fabric under the PT 4x4s to help with drainage.
So, the final grading gets the water away from the building. The gravel means no cleaning the building, easy mowing maintenance. Now if the grass can just start growing....
Pete