0! is defined to be 1 so that certain formula work.
For example: the formula for permutations is: nPr is n! / (n - r)!
which wouldn't work for 5P5 = 5! / (5 - 5)! = 5! / 0! unless 0! is defined to be 1.
A problem that requires 5P5 is: How many different ways can you arrange 5 books on a bookshelf?
Since there are 5 ways to choose the first book, 4 ways to choose the second book, 3 ways to choose the third book, 2 ways to fourth books and 1 way to choose the last book, you get 5 x 4 x 3 x 2 x 1 = 120 = 5!.