Role in the development process

The text format allows for the representation of a binary Wasm module in textual form. This has some profound implications with regard to the ease of development and debugging. Having a textual representation of a WebAssembly module allows developers to view the source of a loaded module in a browser, which eliminates the black-box issues that inhibited the adoption of NaCl. It also allows for tooling to be built around troubleshooting modules. The official website describes the use cases that drove the design of the text format:

The last item in the list reflects that the text format isn't intended to be written by hand in the course of normal development, but rather generated from a tool like Emscripten. You probably won't see or manipulate any .wat files when you're generating modules, but you may be viewing them in a debugging context.

Not only is the text format valuable with regards to debugging, but having this intermediate format reduces the amount of reliance on a single tool for compilation. Several different tools currently exist to consume and emit this s-expression syntax, some of which are used by Emscripten to compile your code down to a .wasm file.