When you are in the actual throes of day to day production… after the development is done and you work out most of the bugs… it certainly is convenient to have some sort of end-to-end Traceability. The general concept is that every change in state or activity that has a material financial impact to the company (or its customers) should be traceable back to underlying actions.
The idea is somewhat similar to how an airline keeps track of its design and maintenance records. When a portion of the avionics fails during a landing it sure is nice to look back through the records to see what parts get linked where, and what has changed.
For example, at the end of the month you send an invoice to your customers. Where do the line items on this invoice come from: what atoms of work and activity (from a systems viewpoint) do they represent? Can you trace back from an invoice number back through shipping, fulfillment, ordering, and customer options?
Many time validation is just viewed as comparing the results of production back to the functional specs to make sure all of the business rules got implemented correctly. But validation should also be enabled for ongoing activity in a dynamically changing system, and this requires designing for traceability, from the very start.