Question

What is the use of multiple costumes for a single sprite?

Answer 1

A costume of a sprite is a different appearance of the same sprite shown at another time.

Instead of creating a new sprite each time, costumes were invented to make one sprite look different.

Here is a scenario: You are playing a computer game and you have lost all three lives. Now your character/sprite changes costume/appearance and has red dots all over it (which represent blood since it's dead).

Having multiple costumes is an effective way of reducing waste of storage space.