Panel is a fairly generic Container whose primary purpose is to subdivide the drawing area into separate rectangular pieces. Since each Panel can have its own LayoutManager, you can do many things with panels that you can't do with a single LayoutManager.
For example, suppose you want a TextArea in the center of an applet with a Button below, like this:
There's no single LayoutManager that will produce this. A BorderLayout will expand the Button to fill the entire width of the applet.
A FlowLayout won't make the TextArea big enough.