This is required when, for example, the final text is not yet available. Dummy text is also known as 'fill text'. It is said that song composers of the past used dummy texts as lyrics when writing melodies in order to have a 'ready-made' text to sing with the melody.
Due to its widespread use as filler text for layouts, non-readability is of great importance: human perception is tuned to recognize certain patterns and repetitions in texts. If the distribution of letters and 'words' is random, the reader will not be distracted from making a neutral judgement on the visual impact and readability of the typefaces (typography), or the distribution of text on the page (layout or type area).