It is used to express repeated or habitual actions in the past. So in this instance it avoids the use of 'used to' a second time in the same sentence. But you could also use 'used to' a second time as well as 'I often spent' if you wished.

It's a rule so learn it. "Used to" can be replaced by "would" if... ...the verb expresses a completed, or complete, action. In the example above, "spend" expresses a completed action.

As an English teacher, I say you make a fine point here. I sure see what you are saying. As a native English speaker, I must say I have heard this so much, it sods perfectly fine. This is way to common for me to have an issue. It actually sounds correct whether it adds up or not. I guess I could say "As long as I can remember, we would do this all the time." Here is what you will notice about each time you here this... It is not a specific point in time. You do not say "I would do this in February of the year 1989." But you may hear someone say "I would do this each February". (or an even less specific time.)

I'd take you actually know the word better enough than you let on, just in this case --- imo it's got things to do with the word's meaning as a noun --- "will".