In my understanding configuration gives us following advantages:

1. Customization: Organizations more likely to develop feature rich, general purpose product addressing public, then according to client specification they customize the product, turn off/on special features.
2. Externalization: It gives advantage of changing software without rebuilding it,and not setting up build environment, build manager etc.  
3. Centralization of variable parts: putting variable parts in centralized external places. Instead of looking through code to change, and debugging we put it in well known location
4. Simplifying change: In order to change configuration of most software, per say xml, one doesn’t have to be programmer and know implementation language, detail etc.
5. Ease of administration: After product is shipped, product is mostly under administrator’s responsibility. To admin the product, one has to see the configuration only, not whole code etc.