Others have answered why it is a law. But why does it need a road sign? You haven’t talked about where you live, but I assume it is a rural place that is slowly suburbanizing by people splitting their property into smaller parcels and building on that as the paperwork is generally easier and that form of density is baked into the zoning of the area.

The problem with this type of building over larger subdivisions is that the road network usually isn’t as developed, since a developer isn’t building the internal road system nor possibly paying for improvements to nearby infrastructure. You also have less experienced developers, generally. Many times, these can be the home owners building themselves and sometimes acting as the general contractor. These smaller future home owners may not be aware of all the paperwork required to develop their property.