It's a form of staying in your own comfort zone. attention seeking or manipulation. If you believe in the exaggeration then it's simple - you don't have to explore or try to understand nuances of behaviour/speech. It is just what it is and your world sits clearly within the defined boundaries of the exaggeration. People also want to be liked, to fit in, to be seen as 'special' so expressing what appears to be definitive knowledge can achieve this. Manipulation is another scenario, using exaggeration to 'persuade' others to follow your path/religion/politics etc. Should you believe the sky is falling in then you're going to do whatever it takes to stop it. It's about control/compliance and manipulation by exaggeration happens all the time, witness tv ads. There's always the old adage that good news never sold a newspaper - saying 0.1% of an organisation is corrupt doesn't have the same impact as saying 100% of the organisation is corrupt.
Apologies if I've rambled - been stressful couple of days so not firing on all cylinders!