One of the best functions of a glossary is that it serves as a place to put background information in a game without cluttering up the writing on the game's main plot. It can be really easy to go a bit overboard and write a lot of background information for a game, particularly RPGs and other games built around having lots of complex characters. However, if a developer tried to put all of that information into the text of the main plot, the game's narrative would get horribly bogged down by unimportant minutia. However, there are plenty of people who like knowing that kind of information, so it isn't a bad idea to make all of that background information available to the player in some optional manner.
There have been quite a few methods of giving this information to the player over the years. One of the oldest is putting this background information into the dialog of random townspeople in RPGs. Another variation are the optional conversations with support characters in the Metal Gear Solid games. It is possible to acquire an incredible amount of completely useless and trivial, yet entertaining, information about every place, character, and item in those games from these conversations.
However, I tend to prefer having an accessible glossary to be more helpful than those other methods for one primary reason: it can be referenced at any time in the game. In most RPGs and the Metal Gear Solid games, it is possible to miss conversations or pass the point where you can go back and read them again. A glossary lets the player refresh their memory of things at any time. This can be useful for a player who plays a single game over a large span of time, particularly if the glossary includes some kind of ongoing plot summary.
Another useful feature of a glossary that can't be replicated by simple NPC conversations is that it can easily include extras such as artwork and character models. Oftentimes, it can be difficult to pay attention to detailed enemy models during gameplay, particularly since zoomed-in camera angles are rare during any kind of combat. So, it is nice to be able to look at the model of a main character, monster, NPC, or item in a glossary section at one's leisure. I would have liked a feature like this in Front Mission 4, since I rarely get a chance to look at the various mechs in that game up close. A glossary would thus be a useful feature (particularly since Front Mission 3 actually gave a lot of background information and artwork as part of its Network feature, so there would be precedent).
While a glossary is a kind of extra feature, it is the kind of extra feature I always like seeing in videogames.