You do need general elective credit to graduate, in a sense.
Most classes at MIT are worth 12 units. You need to accumulate 180 units outside the GIRs in order to get a degree from MIT. This is the number of units you would accumulate if you took all seventeen GIRs at MIT, and took four 12-unit classes for eight semesters.
So coming in with general elective credit means you don't have to take four classes per semester in order to graduate -- you have a cushion, in case you have a semester or two where you need to drop a class or something.