Relinearization is important to build a compact FHE scheme.
An FHE scheme is said to be compact if
- The running time of decryption, and
- The size of ciphertexts
are both independent of the homomorphic computation which has taken place.
It is (roughly) trivial to build non-compact FHE schemes. Take some standard encryption scheme with ciphertexts $c := \mathsf{Enc}_k(m)$.
To homomorphically evaluate $C$, "compute" the ciphertext $c' := (C, c)$.
Then modify decryption to compute
$$\mathsf{Dec}_k'(C, c) = C(\mathsf{Dec}_k(c)) = C(m).$$
I.e. we defer the homomorphic computation until decryption, at the cost of increasing the size of ciphertexts, and running-time of decryption.
Why is this relevant?
In multiplication of tensor-based FHE schemes (things like BGV, B/FV, and even things like CKKS), the (rough) outline is the following.
Start with some ciphertext $c$ such that $\langle c,k\rangle = \Delta m + e$, where $c$ is the ciphertext, $k$ is a key, $\Delta$ is some scaling factor, and $e$ is the error of the computation.
Compute $\langle c_0, k\rangle \langle c_1,k\rangle = \langle c_0\otimes c_1, k\otimes k\rangle = (\Delta m_0+e_0)(\Delta m_1 + e_1) = \Delta^2m_0m_1 + \Delta(e_0m_1+m_0e_1)+e_0e_1$
Scale this down to $\Delta^{-1}\langle c_0\otimes c_1, k\otimes k\rangle = \Delta m_0m_1 + (e_0m_1+m_0e_1)+\Delta^{-1}e_0e_1$.
This yields a ciphertext similar (ish) to the initial one, namely if one takes an inner product between it and a secret key, one gets something like $\Delta m'+ e'$ for $m' = m_0m_1$, and $e'$ a more complex expression one can directly see above.
This ciphertext has one significant issue though --- $c_0\otimes c_1$ is in a formal sense "larger" than $c_0, c_1$.
This means that while we have defined a nice homomorphic operation, the ciphertext has grown as a result of this operation, and therefore we are not yet building a compact FHE scheme.
Relinearization fixes precisely this problem, and defines a way to convert these "large" $c_0\otimes c_1$ ciphertexts into "small" ciphertexts like $c_0, c_1$.
One doesn't have to relinearize immediately, but the growth of these large ciphertexts is quite fast (if $c_i$ have "dimension $n$", then $c_0\otimes c_1$ has "dimension" $n^2$), so one really should relinearize fairly quickly so things don't blow up in size too much.