It reduces their spiritual potential for insight and understanding. It provides them the barest needed rest to get them through the following day. It is a kind of living death that is mandated by the civilisation around them. It is forcing a square peg into a round hole and hitting it with a hammer to make it fit.
The best part of mankind simply doesn't sleep this way at all.
Read the article about "The Watch" being built-in to the sleep cycle. What were people biologically compelled to watch over? If I ventured a guess, I would bet it would be the huge array of Ice-Age predators who would attack at sundown to take their prey. If somebody was not maintaining the Watch, everyone could be killed. What if Ice-Age man was watching over herds of his domesticated animals at night? Every sabre-tooth for miles around would know the easiest meal possible was to surprise the humans at dusk and drag off one of their cattle or sheep. Without a "Watch," a vigilance period hardwired into the human brain, there'd be no humans - period - in these environments. The biology of modern day Homo Sapiens would be so utterly contrary to the Ice Age it is unlikely any of them would survive more than a few weeks in these settings. They simply do not have the right stuff.
A race of mystical, empathic, instinctive, intuitive dreamers. The single best way to ruin them would be to take away their normal cycles of rest and recovery and turn them into automatons who are supposed to shut off at midnight and turn on at 8 am like robots. Homo Sapiens, being a bear of little brain to begin with, would have none of the requirements that 'Thals do to sleep and dream richly to recharge themselves over the course of their lives. A bigger, healthier animal in every way with a larger brain and much deeper psyche would need sleep that would not be required by lite brand generic version humans with brains the size of walnuts. Drones would survive on 4-8 hours but it would kill 'Thals even if only very slowly over the course of their existence.
By disrupting their sleep cycles for their entire lives you would prevent their canny and powerful subconscious processing to produce conclusions that Homo Sapiens doesn't even have the hardware present for. You'd be handicapping the better part of the population mentally and turning them into schizophrenics who were cut off from the best part of themselves. The deeply intuitive side would be paralysed, unable to process information in dreams that is likely to be the most important part of mental function.
Some of the ruling class might still be worried they'd find ways around all this. For example, clever contractors like me might have naps in sun beds during lunch for years that seemed to repair some of the damage and enable them to turn in a better performance in the second half of the day. So of course, there's be a legislative drive to make all tanning beds illegal and tell people that critical life-giving vitamin D from sunshine was optional, like having the blinds open or closed at your house. There would always be a push to close any possible loopholes that would allow a 'Thal to steal ten minutes during the day to power up again. Mustn't have that.
It is also very much a part of the curse, which makes you wonder where this curse has its origins and who was the first person to write it down. You want to know from whence he heard about it. You want to ask this guy, did you hear it as a folk tale as a boy or was it told around a campfire? Where did you receive this story of the Enkidu from before you repeated it?
"YOU WILL NEVER SLEEP WELL AGAIN, ENKIDU, NEITHER YOU - NOR YOUR KIND SHALL EVER REST! YOU WILL WANDER THE EARTH IN A KIND OF LIVING DEATH, UNABLE TO DIE AND SEEKING DEATH BUT NOT FINDING IT! YOU WILL LONG FOR SLEEP BUT IT WILL NEVER COME TO YOU!"
- Humbaba The Terrible, The Curse On Enkidu in the Epic of Gilgamesh