It may look like that, but it was actually drawn by Japan, whoever was drawing Gundam at the time, so they could try and sell this series to the US. It looks like TOEI to me, but I don't know that they did Gundam. (They did almost all the made-for-US action cartoons of the 80s tho). Whoever it was, they made a truly spectacular and horrifying cartoon!
Ahaha.... see, this is actually the pre-cursor to a series that I adore (and mod the comm for) that came out a few years ago called SD Gundam Force, which was supposed to stand for something aside from super-deformed, Special Defense Gundam Force or something. It features sentient robots, which are my favorite kinds, but they're small. In fact, they're super-deformed!! Those villains you see there (Doozy bots was actually created in Japan for American audience, which is why it's so horrible) are Zakus, and they're pretty standard in tiny Gundam world XD
So, basically, the purpose is BECAUSE THEY'RE CUTE. They also apparently had another series in the late 90s, but I never saw that one. I have a bunch of SD Gundam models from the 90s, tho. wtf, am I a nerd ;D