I do this to encourage attendance. Before I ever implemented this policy I did a statistical analysis of several hundred of my students and found that good attendance correlated strongly with good grades. I hope that this is because my lectures are good, but in case it isn't, I don't want to penalize students who are able to learn the material without coming to class. Therefore students with poor attendance receive no grade penalty; they simply don't get to drop a quiz. This is fair: if you think you can learn the material without coming to class, I ask that you prove it to me on quizzes and exams. There is no grade penalty for poor attendance (unless you are absent for quizzes or exams).
Also, students who come to class regularly are exposed to more material than I can test (final exams would have to be far longer than two hours to be truly comprehensive). The quiz-dropping bonus additionally reflects my belief that these students have learned more than students who missed classes but still did equally well on exams.