Heruga, it's pretty much the same as trying to put a plant in a hole that's not big enough. Same theory, really.
The roots need to spread out to make better use of the water and nutrients in the soil.
If all of the roots are concentrated only in that one little area, it'll never get what it needs.
The leafy canopy of the tree is going to keep it fairly dry underneath. (It's a canopy!) With all the roots in a tightly compacted ball,
directly under the tree, how will it get water?
As the tree grows, it needs more nutrients. Imagine if I told you - you are not allowed to leave your house to get more food. You can only have what is in your house right now, and then you must go hungry. How long would it be until you starved? So ...
Where will the roots go to get food?
Also, keep in mind that the roots are what anchor it to the earth. If the roots spread far and wide, the tree is stronger. If the tree gets big, and the roots are not serving as an anchor, a big wind can rip that tree right out of the ground! (How stable would you be if you had to walk on feet the size of a 3 year olds?)
So, all that, plus what
Chuck said.