Adds a bit of spice and challenge to the game. Also makes you learn squad tactics real fast.
X did this by being able to change out characters in-combat.Speaking of which, does anybody else miss the big party sizes that games used to have? I remember FF6 had parties of 4, while almost every FF game onwards only had 3.
You have all these people travelling together, let them fight together, not just pick the best 3 and force them to tag each other in and out due to some unwritten rules of chivalry.