InternetWorks (circa 1994) was the first tabbed browser. Browser tabs as we currently know them were introduced by Simulbrowse (now Netcaptor) in 1998. Opera 4.x followed the trend in 2000. Mozilla added tabs in 2003.
As for the purpose of tabbed browsing, the feature is great for us people that commonly have 30+ web pages loaded. I oftentimes exceed 100 open pages, which would be a nightmare for Windows to manage with non-tabbed browsers.