When I initially started talking publicly about the fact that I was working on the Yocto Project, one of the first questions I got was, in essence, "Why would you need to build an OS from sources?" After all, there are plenty of distros out there who have done the hard work for you.
The invention of the binary OS distribution is not a new thing. I remember back in the days of BSD we could boot up a binary image on our VAX 750 and we didn't need to build the OS from sources first. For Linux, there are a plethora of free and commercial distributions, from Fedora, Ubuntu, SuSE and many others.
Now don't get me wrong - I love all of these binary distros when used on servers and clients. I have nothing against them and I really adore them.
There are just some very serious problems using them on embedded devices. Here's just one:
A whole lot of people will install a binary distribution on their target embedded device, add or remove packages, customize their application and then ship the system. There's just one teeny tiny problem with this.
It violates the license agreement.
Remember the terms of the GPL: any time you redistribute binary code licensed with any version of the GPL, you also need to redistribute all of the sources which are affected by the GPL as well as the build scripts.
Although it's possible to find all of the sources when you redistribute a binary distribution plus or minus various packages, it's usually a major pain to collect them all up. And finding the build scripts may be nearly impossible. (And I'm not even getting into the problem of GPL v3 code which adds further restrictions). 
So one of the major advantages of a system like the Yocto Project is that all of the sources used to build the system are readily available in one location. You can pull up the license manifest and all of the sources and build instructions and make them available with your product. 
So now when people ask me why I don't like people using conventional distributions of Linux for their embedded devices, I usually tell them I don't want to encourage them to break the law. I don't actually know if violating the terms of a contract (license) is perhaps not the same as breaking the law, but it's pretty much the same to me.
So instead of breaking the license - or pulling yourself into a pretzel to try to meet the terms of the GPL with a binary distro - why not just use the right tools for the job and use the Yocto Project!
. I love it when device makers do things the right way, and some do. For example, you can go to Sony's web site and download all of the GPL-licensed code for their products. Way to go!
. Of course, if you don't make these sources available online or in an offer, then you are still in violation of the license. We can only do so much in the Yocto Project - you do have to take some responsibility.