This way you can simply dump the card as needed without having to resort to using.
The private key never leaves the card and can never be captured. Get the password wrong and it's locked out FOREVER.
If you lose the card or it's broken you can't be made to give up it's info while complying with the police.
"I'll never tell you the password" becomes "This is the password, oh shame the cards broken."
Feel free to disagree.
No link to said smart card?