There is not only Outlook in life. Many eMail clients use IMAP keywords to store flags to keep them sync between different computers instead of storing them only locally.
Any current opensource IMAP daemon (Dovecot, courrier-imap, Cyrus IMAP, etc) supports it and it is also webmails like Roundcube uses this feature on the backend IMAP server to store categories flags.
(yes we had recently to install roundcube in front of smartermail as a workaround to the many issues our customers is currently having with webmail encoding issues)
We moved customers from our previous mail system to SmarterMail and had quite a bunch of complaint that this flag keeping ability has been lost since they are on SmarterMail.
Due to past and current issues we are now moving them again to a new opensource components based mail system we had to setup to replace SM.
We first decided to use SmarterMail for our mail service because we did not want to spend time on developing our own mail system based on existing componants and use our time on other projects.
In the end we unfortunately spend more time troubleshooting issues, doing detailed bug reports, losing existing customers (and even new sometimes when we mention SmarterMail) and decided recently to go back to a service we can fix ourselves and don't depend on another company goodwill.
This answer about the IMAP keywords implementations seems to confirm we're right.