Many rating systems have divisions like A, B, C or 2, 3, 4, 5, 6. When you assign spots based on those ratings, you get seriously unfair matches. A high 4 against a low 4 is a whole division apart, more or less. A low 6 against a high 5 should be an even match, but it's not.
A system like FargoRate has maybe 50 levels of "5", say from 400 to 450. That means that with FargoRate you have "finer grain" ratings that allow more accurate estimates of differences of ability.
In terms of spots in handicapped events, usually the steps are pretty coarse, say from 5-4 to 5-3 games as the step. At straight pool, you can change the target score by a single ball, say from 100-73 to 100-72 to get very "fine grain" changes in the handicap.
It's a trade off between being easier to run and being fairer.