I guess it makes them more aerodynamic - if they're wearing great big shorts then they aren't going to go as far or as fast, the same as the cyclists wear tight shorts as well. I also think it will be important, especially in things such as diving where it needs to be judged, that the judges can see the athletes body and technique clearly so they can judge them correctly? I don't really know why, but I figure that would make sense.
It is the same reason they shave all of the hair off of their body, For a cleaner entry at the end of the dive. That is why the women's suits are so tight as well. This is information from friends who were divers in college.
Is this like a "Quiz" question because you know the answer...or a simple question because you want a variety of answers? With each and every athletic feat, the proper uniform/equipment/attire is essential. The "skimpy Speedo" as you call it is for 1. comfort and "safety" 2. Speed and agility.....something smooth and close fitting would not "impede" the human body flying through water......and I suppose.........3. If you were a man with an absolutely flawless, athletic, perfect specimen of a body......wouldn't YOU flaunt it?? They don't make skimpy bikinis for Fat girls.......though many a chubette has attempted to pull it off.........unsuccessfully! Hope I helped you with the answer.