This orbit is high enough that Hubble is above the Earth's atmosphere and can conduct its science operations without the negative effects of the atmosphere.

Seeing through Earth's atmosphere is similar to looking at objects through a pool of water. Remember how little you can see when you open your eyes under water and how much better you can see when you are out of the water. It is very similar as far as science is concerned with the telescope. The Earth's atmosphere acts similarly to water and greatly reduces what we can see in space from the ground. Hubble is in orbit above the atmosphere because it has unrestricted visibility into space and can "see" much better than anyone or anything on the ground.