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Why did Old English have grammatical gender for nouns?

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Old English possessed grammatical gender because it was a West Germanic language that inherited the three-gender system (masculine, feminine, and neuter) from Proto-Germanic. In this system, nouns were classified into gender categories that were often arbitrary rather than based on biological sex.1

Grammatical gender functioned through concord, meaning that adjectives, pronouns, and demonstratives had to change their form to agree with the gender of the noun they modified. For example, the gender of a noun was often indicated not by the noun's own ending, but by the specific terminations of the adjectives and demonstratives associated with it.21

This system persisted throughout the Old English period but eventually collapsed as the language's complex inflectional endings weakened and were lost. As these outward marks of agreement disappeared, the grammatical gender system faded, eventually being replaced in the English language by a system of natural gender based on the sex or animateness of the referent.213