That would e.g. make it reasonable to check in virtual machine images or iso images into a repository. Extra storage (and by extension, network bandwidth) would be proportional to change size.
git has delta compression for text as an optimization but it’s not used on big binary files and is not even online (only on making a pack). This would provide it online for large files.
Junio posted a patch that did that ages ago, but it was pushed back until after the sha1->sha256 extension.