For the same reason bagels have holes – so they’re not a gooey mess inside. Although doughnuts and bagels are cooked in different ways (fried and baked, respectively), both are dense with dough when they’re solid disk. To help them cook evenly all the way through, bakers punch out the middles. The holes also helped bakers display doughnuts on sticks when they were introduced in the late 1800s.
Donuts became popular in America around the same time bagels were becoming popular. Bakers and street vendors would often sell bagels stacked on long sticks or strung on a long rope. Some people believe that the holes in donuts allowed them to be sold in a similar way. Many people believe that those pieces of cut-out dough are what are used to make donut holes, which are those little round donut pieces that so many kids love to eat with milk.
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