#1 rehydrating dry yeast in water activates it. Rehyrdating it in a sugar solution (wort) causes issues with the permeability of the cell walls of the yeasties as they are brought out of thier sleep. It is generally easier for the yeast to activate and rehydrate in water, instead of wort.
#2 generally liquid yeasts are used in specialty beers... they have a WIDE variety with different attributes. Cant brew a heffeweizen with Nottingham.. you need like WLP300 or something like that. There are many more strains when you start looking at liquid yeast. Your choices in dry yeast are very limited.
If I understand correctly, there are a LOT more strains that come with liquid yeast, not sure exactly why. Re-hydrating dry yeast strengthens the cell walls of the lovely little bacteria before they get tossed into a massive amount of sugars, giving less of a lag time, also increasing their survival rate. Extremely short, subpar explanation, but I figured I'd chime in since no one else has yet.
Liquid yeast are really quite a range of yeast and ferment wort in many different ways which produce esters which partially change the taste of the beer. They are very pure strains when compared to dry yeasts.