Why do crypto exchanges offer trading pairs?

Could you elaborate on the rationale behind cryptocurrency exchanges offering trading pairs? It seems to be a fundamental aspect of their operations, yet the specific reasons for this practice remain somewhat elusive. Is it simply a means to provide more liquidity and flexibility for traders? Or does it stem from a deeper need to facilitate the exchange of diverse digital assets? Could you break down the benefits that these trading pairs offer to both the exchange itself and its users? Additionally, how do exchanges decide which pairs to offer, and what factors influence these decisions? Understanding the motivation and impact of trading pairs would provide valuable insight into the workings of crypto exchanges.