Data discovery finds what data you hold and where it lives. Each type of data then gets the protection it needs.
Data discovery is the work of finding out what data you actually hold and where it lives, which is the starting point for protecting any of it properly.
Once you know what you hold, each type of data can be given the protection it needs instead of a guess. A current inventory also shortens your response time during an incident, because you can answer the question of what was affected quickly and honestly. It tells you where to spend first, since the systems holding your most sensitive records clearly deserve the most attention and budget. Much of your data ends up in third-party hands, so pair discovery with vendor risk management to see the whole picture.