Some employers pay differentials for other things, too ... not just for evening shifts and night shifts. My employer also pays a differential for hours worked on the weekend and also for being the Charge Nurse or for being a preceptor.
Employers use differentials to reward nurses for either working an otherwise unpopular shift and/or for taking on extra responsibilities. And as RN2B07 said, they can really add up. It's important to take such things into consideration as you are looking for jobs and comparing one compensation to another. One employer may offer a higher base salary, but very small differentials. The other employer may have a slightly lower base salary, but actually pay more because of the higher differentials.