I have seen some people use these on dating apps where they don't want their own children's or other people's children's faces to be visible. I understand that use case a bit more from a privacy perspective.
For others, its about sharing with people that you know that you and your kids had a good time while providing some privacy protection for your kids. Micro-managing who can see what picture is hard, the people that know your kids get the full mental image from the picture.
Maybe it's just me but this kinda thing seems a little weird. If it's too much work to partition into groups then maybe not post at all? But then again I'm not doing any social networks so I guess I'm not the intended audience.