Blood volume needs to be big enough to keep us alive. Hydration is part of what keeps up our blood volume. Water also plays a part in balancing our electrolytes and many other things. Blood carries nutrients like vitamins and minerals and also oxygen, salts, clotting factors, all sorts of things throughout the body to keep us alive.
When you drink water, part of what happens is some of it is absorbed into the blood stream if it is needed. When you are dehydrated part of what is suffering is your blood needs more hydration too.
If you put the water right into the blood stream you skip a step, so it hydrates you faster. Especially when someone can’t swallow or digest fluids, IV fluids become essential.
If it’s more hydration than you need, the water is taken from the blood and flushed out through the kidneys. You can get too much hydration too fast, which can be deadly. Usually IV’s are a fairly slow drip.