I think it looks silly, but I've hear it does have a purpose from some friends of mine. If the sidewalls are stretched they can't flex. If they don't flex drifters have better control. Better control means winning compititions.
Its a style thing, but as a former tire engineer for Goodyears racing division it really makes me laugh. Certain sports car series for classic cars require you to run the original rim width, so we were constantly designing tires that were "too wide" to work with the older, narrower rims; the exact opposite school of thought. If designed correctly (most attention payed to a super stiff sidewall), those oversized tires actually performed quite well at proper tire pressures on the narrow rims. At least those racers realized more tire meant better grip levels, this stretched tire fad is quite sad in my opinion.