Political parties serve four key functions in the American political system
Political parties (1) select candidates, (2) mobilize voters, (3) facilitate governance, and (4) monitor the opposing party when it's in power
Over the next century, the political parties reluctantly launched in the 1790s matured into essential parts of our political system, serving four critical functions:
Select Candidates. Political parties nominate candidates for political office. They narrow the field from a multitude of wannabes to a manageable few credible candidates. This simplifies the voters' role and brings a certain order to what could be a chaotic electoral process.
Mobilize Voters. Political parties inform and energize their members. They send out brochures, run media campaigns, knock on doors, and call voters on the phone. Individual candidates can do the same thing, but parties maintain elaborate networks of state and local offices that can be immediately pressed into the service of a candidate once the party nomination is secured. In addition, parties have fundraising apparatuses in place that simplify their candidates' ability to finance their campaigns.
Facilitate Governance. Parties also bring order to the process of policymaking. As party members, individual politicians have a ready-made group of allies that will usually cooperate with their efforts to pass and implement legislation. At the national level, this means that a rookie Congressperson arrives with a network of allies that will support his efforts and that he must support in turn. In addition, party alliances close the gap between the legislative and executive branches. While separated by the Constitution, the existence of political parties narrows the distance between the branches and helps them work together.
Monitor the Opposing Party in Power. Parties also serve as critical watchdogs for the public. The adversarial relationship between the major parties ensures that the party out of power (not in possession of the presidency) will keep a close eye on its opponent and notify the public of any wrongdoing or policy misstep.
In other words, parties are pretty important. It is hard to imagine our political system functioning as effectively without them. But if they are such a great thing, why are there only two? If parties are so essential to our democratic form of government, why don't we establish a whole slew of them?