This particular binding has a history which goes back to the Japanese era of when the written words were on done on scrolls (paper was invented in 2 AD, 1000 years before the Western world got to it). There were disadvantages to the scrolls that they got damaged easily and it got impractical to roll and unroll a long scroll to look for a particular passage. The Japanese developed a system where they started pleating or doing a concertina fold. The next bit was that while it was a good idea it was still loose. Hence the idea of stitching down one side to contain the folded pages.
The wonderful thing about this particular binding is that each page is a loose sheet. Therefore the content of the book could be completed before assembly and bound with the covers.
To learn more about the history and background to this binding refer to this site, it was a student dissertation, very useful.