It was sometimes used to have TYPE print something human readable and stop before the remaining (binary) file data would scroll everything away
Notably, in the PNG file format (created back when MS-DOS was still very relevant):
"The first eight bytes of a PNG file always contain the following values: [...] The control-Z character stops file display under MS-DOS. [...]" (http://www.libpng.org/pub/png/spec/1.2/PNG-Rationale.html#R....)