Identification of friend or foe is crucial in the fog of war. No army wants "friendly fire" and when it does occur it is usualy kept hush hush. Even the Germans with their coordination and superb optics shot their own tanks. Tank to tank was very rare but the anti-tank or arty gunners had issues, as did the Luftwaffe. Hence the tank ID flags used so much early on in the war. Large and unique markings made these tanks readily identifiable in battle.

The Germans were also pioneers in "Combined Arms" operations. Unit ID and tank numbers also provided reference points and defined the units sectors. Air, engineer, panzer grenadeer and Heer forces could always tell who was who and where. They valued radio communication and order of battle. The phrase is German is "Ordnung muss sein" auf Englisch "Everything must be in order". Why do you think so many police cars, fire and ambulance units have numbers ont their roofs? Air coordination and reference reduces chaos and confusion. A tank or unit mumber is much easier ot hear and pick-out on a radio than a name(how many Michaels were in Wittmanns unit?) or location (which was always changing or you didn't want your enemy to overhear on the radio).

Decorated units and Abteilungs were very proud of their units and or leaders. Guderian's armor units even painted a large "G" on their tanks to distuguish themselves.