I think you meant phat lip.
It is more for looks. People want that deep lip look in the back to give their cars that mean wide predatory stance. I had Radenergie R10s on my M3 and the 4 inch lip in the back gave it a really awesome stance. Backside was it was really heavy and made my pre-supercharged M3 slow. I sold 'em and now running the stock look.