Yes, Dropbox transfers and stores in an encrypted environment and I agree, it does look like your password is the key. However, who else has access to your password? What happens if Dropbox does have a breach? (It’s not like banks and military have never had any incidents..) What happens if a government or local agency wants access to your files?

Basically, putting your important personal files in an encrypted volume gives you an extra layer of security against anything that may or may not happen.