Is there a point to setting assignment deadlines and late penalties besides practicality?

Your proposed system reduces to the case where all assignments have their deadlines effectively at the end of the course. Courses with such a system do exist, but I am not aware how common this is.

One reason I can think of as to why early deadlines may help is the ability to give feedback. Providing feedback for each assignment before the next allows the students to catch misconceptions and flaws in problem solving approaches early, which in turn can help them perform better in subsequent assignments. While this reason still does not require that there be early "hard" deadlines (e.g. students could get feedback whenever they submit), I still think it counts as an argument in its favour as it helps in better achieving the learning objectives.

1: You can't give out model answers or detailed corrections until the deadline has passed.

After all, it'd be pretty unfair if Student A submitted on time without having seen model answers, and Student B submitted late and had model answers (or a friend's work with the academic's corrections) to copy from.

And if you delay giving out corrections or grades until the end of term, whence comes the feedback so students can improve their grades?

2: Providing motivation - i.e. downsides to procrastination - is a key part of the university product

There’s a guy inside me who wants to lay in bed, and smoke weed all day, and watch cartoons, and old movies. I could easily do that. My whole life is a series of stratagems to avoid, and outwit, that guy. -- Anthony Bourdain

Everyone knows that, in theory you could get a college education by just checking out textbooks from the public library, reading them cover to cover and doing all the exercises. Or following some of the better online courses from the vast wealth available these days.

But everyone also knows very few people do that successfully; that MOOC students often fall behind on watching videos; that loads of people have things books they mean to read and suchlike that they haven't got around to; and that it's very common for learners to do assignments at the last minute and cram study right before exams.

And even if the most studious 20% of your students arrive with top tier self-motivation and time-management skills, not all of them will. And having lecture attendance be optional is already a big step up in self-control from high school.

Deadlines reduce a student's option from "study now, study later, or fail at a cost of tens of thousands of dollars" by removing the option to study later - and thereby helping them overcome the temptation of procrastination.

3: Having people who are on course to fail know that early is a good thing.

Sometimes a student will find they're out of their depth with their choice of classes. If they discover that early, they can step up the amount of effort they're making, find more support, switch to an easier major, or drop out to get a partial refund.

But when you're in that situation, even thinking about it is stressful - much like someone in debt will come to dread opening their mail. Far easier to say to yourself that you'll rewatch those video lecture and do those assignments later, putting off the tough realisations. But in the long term, delaying can turn a solvable problem into an unsolvable one.

Way back in prehistory (i.e. 25 years ago), I experimented with flexible deadlines, staggered deadlines, or no deadlines for papers and problem sets in math courses in several institutions. (Yes, I had students write papers in a math course.) It was a mixed success.

There is rationale for timed work and firm deadlines, some stronger and some weaker, from both the instructor’s convenience and student individual learning outcome point of view. Other answers are covering that.

What I’d add is that you're in competition for students’ attention versus their other courses. And for many, each academic term is stressful, and (like all of us) perceived urgency easily becomes the default prioritization heuristic. If your policy on deadlines is significantly more lenient than other courses, your work will be put off. Yes, its paternalistic, and not all students need the pressure of deadlines, but it’s dangerous if your course can easily become the pressure valve in their academic lives.

There’s actually a spectrum of paternalism, from requiring and taking attendance at every class and requiring documented excuses on one extreme, and on the other extreme a laissez faire attitude of “I don't care if you ever showed up; write a final exam / submit a single comprehensive paper whenever you get around to it, and I’ll give you a grade in that term". For an optimal student learning outcome, it’s probably best to be slightly more lenient than average at your institution, i.e., to avoid being too close to either extreme relative to what else they’re experiencing in other courses.