I think it’s just a simple test to make sure that the whole compile/build/make process is working.
If you can turn a simple text source code into a working executable, then you know everything is working.
In a microprocessor world, a blinking LED is the equivalent of Hello World… turn source code into binary, upload/burn to the EEPROM, and see if the microprocessor executes your program, i.e. blink the LED. Again, just a quick test that the whole source/build/upload sequence works.