- Play balance.... easier to have this, when the player isn't an infinitely increasing Uber Dude who can do everything, get every ability, etc.
- Having to make choices in how your character is built. When you only have X levels in which to choose perks/stats/etc, you actually have to think about how you want your character to grow. When you can just get everything...... And yes, one can delete one's character when they his Level Whatever, and thereby have a "level cap".... except that Beth games encourage hanging around & exploring longer. In the previous games, even the TES ones, I didn't have infinite levels - at some point you stopped gaining skills/levels/etc. But I still kept wandering/exploring/questing long beyond that point, because "get stronger/gain levels" isn't the primary focus of gameplay. For me, at least.
What does a level cap have to do with choosing to play or not play the MQ? Most of my playthroughs of Oblivion, Skyrim, and FO3, ignore (or mostly ignore... might sometimes advance it to unlock world events/etc) the MQ. You can do that with or without a level cap.
Personally, I think a level cap is what encourages replayability - since you can't do everything on one character, you've got more reasons to play other ones. No cap / MOAT? Less reason to replay.