When governments print banknotes, they can sell them and get money to do things at face value, instead of having to get loans and issue bonds where they'd have to pay interest or charging taxes where their citizens would object. In fact, in countries like the EU, UK and USA, despite normal people and normal companies using cash less and less, for the past couple of decades, the amount of cash printed has increased rapidly because as long as people buy it, there's a big incentive for governments to print it. Bigger face value notes mean more money for less printing, so are the best thing to issue, as long as people are buying them.

That leaves a big question of who on earth is buying more banknotes each year than the last. The obvious thing that can be best done by banknotes is storing a large value in a small space with the ability to be moved around without traceability or counterfeiting, which really only matters to money launderers. Things like bank transfers and cryptocurrencies can be traced as long as someone knows who owned the money at some point, but if you buy your bitcoin with cash from someone who doesn't keep records of who gave them the cash, then your crypto wallet is totally opaque to the authorities.

The people involved range from minor things like spouses hiding money in a divorce to tax dodgers to drug dealers to people traffickers to sanctioned governments, and when that's all added up and funneled through opaquely-owned shell companies so it doesn't look like it's Russia or Iran's money buying the cash, there's enough demand for governments to justify building new money printing facilities and issuing higher denomination banknotes.

If you want to learn more, there's quite a lot more detail in Everybody Loves Our Dollars by Oliver Bullough.