The short version is that it doesn't actually help kids learn to read. In fact, it teaches them not to read, and try to use other clues to guess what a word might be. Look at the picture, look at the sentence, and think about what word would fit in that space. The trouble with that strategy is that there are usually many words that fit any given spot in a sentence, and focusing on the cues distracts from the word itself.

As a part of a strategy, it's not terrible if a kid looks at the picture for help, but as a standalone strategy, it's counterproductive. It's been debunked for like 40 years.

But selling educational books is a massive business that isn't run by scientists or educators. Between the politics, corruption, and general indifference, it was never profitable to change the approach. So kids have been taught not to read for 40 years.