The housing has several functions:

1. protect the tiny fragile silicon chip from damage
2. hold the pins stationary, so they do not flop about and short together
3. provide a form factor large enough for either manual or machine parts placement on printed circuit boards
4. be able to tolerate thermal stresses during operation without having a failure (some early leadless chip carrier housings failed this function as thermal stresses sheared all the solder joints and permitted the devices to fall off the board)
5. if its a metal or glass housing, maintain a hermetic seal so that water vapor and other outside gasses cannot enter and cause contamination or corrosion
6. in high power devices, provide a good path for thermal conduction away from the silicon chip and the means to attach a heatsink
7. etc.