I think it was included because it was consistent across browsers.
There's some weird Rails specific things that I am not too sure make sense (like having the ability to use DELETE as a data method for a hyperlink) but make CRUD apps simple to follow in terms of the Rails way-of-thinking.
I'd have to check the source, but I think it was also used for AJAX forms. I think the safe answer is that Rails is great to create something quick but the built-in helpers aren't always very sane.
It's a full stack framework. You can include JavaScript for your views, probably most commonly used to show, hide, and insert and remove elements from the DOM.
To expand on this, the tool of choice for the frontend part used to be PrototypeJS. In Rails 3.1 the relevant portions were decoupled and became options rather than baked-in, with jQuery as the default but still an option among several: http://weblog.rubyonrails.org/2011/4/21/jquery-new-default/