It puts pressure on the woman to not deny the proposal. Maybe I'm cynical.
To be honest, I was thinking the same. Maybe sometimes is the case (in the worst of cases), but sometimes it is because they feel more secure with more people around? (Makes no sense, I know, but sometimes is like that for some).
Not just that, some people think is really romantic. For example, the boyfriend of a friend of mine prepared a song and everything to ask her to be his girlfriend during her birthday, with her friends and family surrounding them. Of course she said yes, but personally, I would never like something like that. If I ever get proposed or something, it would have to be something really original or being talked about and not an usual proposal, and especially never out in the public.
That, or maybe I'm too old fashioned