It's so we don't count too fast. When one is counting, the tendency is to speed up over time, and saying Mississippi in between numbers keeps one aware of this tendency, hopefully leading to more accurate counting. We also say: "1 one thousand, 2 one thousand, 3 one thousand, 4 one thousand..."

We think it takes exactly one second to say "Mississippi." So if we want to measure how much time something takes or if we have to wait for X number of seconds, we count 1 Mississippi, 2 Mississippi, etc.