You might think it isn't necessary these days with availability of other fluoride sources, but research still shows a benefit to the practice.
Communities that discontinue it without replacement interventions see a rise in tooth decay.
Often the replacement interventions are costlier. For example some countries in Europe like France, fluoridate their salt instead of their water, much like we supplement our salt with iodine. Or do topical fluoride and sealant interventions - Finland has government funded programs for all children.
If you want to learn all about the subject the American Dental Association has a great accessible guide on the matter with copious references to the scientific data. And it answers a lot of your questions and concerns.