Using a hardware ND filter, you reduce the incoming light. Software does not do that.
Say you want to shoot in a bright sunny day, and want to use a slow shutter speed of 1 second to make the water "silk-like" . This is almost impossible without reducing the amount of light entering the camera using a ND filter. This is because at f/16 ISO100 the shutter will still be too fast to blur the water. In this case, without the ND filter you simply cannot take the shot.
If you are shooting at night a water fountain, you will also use a gradual ND filter. Say the water fountain is brightly lit with all kinds of colors, and the surrounding and the foreground is not as brightly lit. You want to use a large apeture, low ISO and slow shutter speed to capture both the dim foreground and the water. Without the gradual ND filter the water will be over exposed, and the details will be lost.
So these are fundamentally different approaches. When you need to reduce strength of the light source, you have to use ND filter. Software only adjusts the brightness of the photo within a small limit, and only when exposure is history.