A promotion to a higher job level puts you in a more influential position. You are being given more responsibility. It’s not a reward. Instead, it’s the company granting you more influence.
Of course, increased pay often accompanies a promotion. However, the added responsibility is the reason the company did the promotion, not the compensation.
Those who run the company are always looking for people to take on more responsibility. They’re looking for people who can come up with the next business idea, lead larger spaces, identify opportunities, and fix recurring problems. It is relatively easy to find people who are good at their jobs, and hard to find people capable of doing the next level job.
Circling back, companies promote people into larger responsibilities when that person looks like a leader. Leaders identify their own opportunities.