Primarily this seems to be a technique used by games, where they have all the sounds in one file, textures in another etc. With these files commonly reaching the GB size.

What is the reason behind doing this over maintaining it all in subdirectories as small files - one per texture which many small games use this, with the monolithic system being favoured by larger companies?

Is there some file system overhead with lots of small files? Are they trying to protect their property - although most just seem to be a compressed file with a new extension?