You are speaking of the X speed setting following Bulb setting as you go to the end of the dial for very slow shutter speeds. This X setting means the normal X flash sync speed, specifically that this X shutter position setting will use whatever sync speed you have set in menu E1. This is mentioned in the manual at the E1 menu. If you see 1/250, then your E1 must say 1/250 (default on D7000).
E1 does not actually change sync speed, which is hardware in the camera, and is always 1/250. But we can limit shutter speed to be slower in E1, or we can bypass it to be faster with Auto FP HSS (also in E1).
I don't know the reason this X is added at the end with Bulb, other than it is rather long way back up from Bulb to 1/250. It's just a convenience shortcut. There probably are users that only use Bulb or Max sync speed for flash, both are popular.
OK, I did not respond to the second part of the question about why. The maximum sync speed (the 1/250 second) is used to keep out any undesired ambient light. Shutter speed does not affect the flash, but a faster shutter will reduce the ambient light. For example, 1/250 second at f/8 (ISO 100) will usually keep out (underexpose) even the close bright modelling lights on studio flashes (because the flashes are much brighter, and not affected by shutter speed).
Alternately, if you do want some contribution from the dimmer ambient indoor light, you would use a slower shutter to allow some of it to register (Or higher ISO or wider aperture could do that for TTL, but Manual flash just reacts to those in the same way as ambient, with no ratio change). But one reason to shut it out is because incandescent light tends to be orange, not matching Flash white balance. Slight warming is sometimes considered good, but not normally in studio sessions.