The wadcutter is a target bullet -- designed for two things, accuracy and making nice, crisp round holes in targets.
Accuracy is affected by bearing surface, and the wadcutter is all bearing surface. In addition, target usage doesn't require high velocity, so most wadcutters are quite soft -- swaged bullets are common in this configuration. At low velocities, these soft bullets "slug up" nicely, filling the barrel from the bottom of one groove to the next, which usually produces fine accuracy. And many wadcutters are also hollowbased -- which further aids "slugging up" and obturation.
Next, in most target shooting the rule is "A shot that cuts or touches a scoring line counts for the higher value." The crisp holes wadcutters make are easy to score, and you don't lose points by having a less-than-full-diameter hole.
At typical pistol ranges, wadcutters can be quite effective as defensive rounds. I took a Colt M357 to Viet Nam on my first tour, and used hollowbased wadcutters loaded backward. It leaded something terrible, but was quite effective in action.