If the applicant is from a family that donates a lot of money to the university, that applicant gets a very large number of points.
The university also wants diversity in its student body because that creates part of the environment that makes the university experience what it is. This is not just racial diversity; if the university has fewer students from rural areas, then that year applicants from rural areas get more points.
If you're worried about less qualified students getting in, the situation is much more pronounced when we're talking about students from rich families, but strangely, we never see a right winger complaining about underqualified rich kids getting into a university at the expense of another candidate, and only rarely complain when the same thing happens with an unusually talented football player. These circumstances are much more common and involve far less qualified students than you will get with a minority student or a rural student, but for some reason we only ever hear complaints when this happens with students of certain racial backgrounds.
Ever wonder why that is?
Actually, I can see a good reason for legacy admissions--see my emphasis above. The issue is whether they actually displace anyone and so long as enough money is involved I don't think they do.
You have a university that admits 10,000 honestly. Lets say they do 500 legacy admissions also. Did that displace 500 qualified students? Or do they now have enough money to admit 10,000 qualified students *AND* the 500 legacy ones?
If it's less than enough then the legacy admissions are bad. If it's more than enough the legacy admissions are a net good. (Note that you need to average it over all donors, not on a case-by-case basis.)