I think the initial thinking was that faxes were better for sensitive information. Emails are routed through servers that could, potentially, be reading the contents of the emails. Emails can also be routed internationally, even if receiver and sender are in the same office. Faxes are point-to-point, and can not be intercepted except by court order (in theory at least). That's why you will see so many faxes in the medical and legal profession.
Secondly, the sending fax receives a confirmation code when the fax is successfully received. If there was every any dispute about whether a fax was sent you could use the confirmation code to prove it was received (not just sent as with email programs.)
And thirdly, it's easier to sign and fax a sheet for most people than to print, sign, scan, attach and send. Not everyone has a scanner available.
All of the above said, there are obviously ways keep your emails safe from prying eyes (but its not a default setting and requires some set up at both ends); confirm that the email was received (again, not a default setting. And I've never used the confirmation. Does it actually work as advertized?); And of course you can sign and scan emails, but its not really as convenient as signing and dialling.
Ironically the email-to-fax services have totally negated the privacy advantages of the point-to-point fax system. I have a scanned copy of my signature on file, so if I get a fax by email I can cut and paste my signature onto the document (avoiding the print, sign, scan steps) and then just send it back as a fax by an email to fax service. And somehow this is considered "legal" because it was received back as a fax, but sending the exact same PDF document by email is not. Oh well....