The simple answer is spectacle. Fairies and witches (there are 6 in Macbeth by the way, and a goddess) allow for special effects. We today do not think of Shakespeare as having special effects, but they did. In fact the first Globe burned down because of a misfired cannon.

Fantasy and supernatural events were also, as has been mentioned, a motif of drama. The Greeks used it (Medea rides away in a chariot drawn by two dragons, the Furies make an appearance in The Eumenides) The Romans, who based their works off of ancient Greeks, and the medieval cycle plays (devils and angels were quite popular).
I take acceptation to the notion that the fantasy was only so the groundlings would pay attention. In fact the groundlings were not idiots; they were just poor. They came to the plays to hear new language. Shakespeare packed his plays with new language for the time. Some of Shakespeare’s most popular plays, such as the Henry VI’s, have little to no fantasy.
The best answer I can give is that the fantasy exists because the story requires it. Think of Midsummer’s. The play is about dreams (among many other things) drams are about fantasy, what better place to add in a few fairies? The fairies in fact play to the chaos of the play. Order is turned upside down. A woman chooses her husband against her father’s will, they all run away. The queen of fairies has a tryst with a “rude mechanical.” The natural order of things is turned upside down, and the fairies make that more believable.

In Macbeth the witches, goddess, spirits and apparitions are there for several reasons. One, the play deals with the question of fate vs. choice. The witches are the speakers of fate, a role that is always supernatural in literature (note: Cassandra of Troy, The Sibyl at Delphi). James I, who we believe personally saw a performance of the play, was a devout believer in witchcraft, and Shakespeare took great pains to get the witchcraft in Macbeth right. That is one of the reasons the play is said to be cursed.

Shakespeare’s use of fantasy is for plot. The ghost in Hamlet creates the tension for the rest of the play, the storm in Lear sets the mood for his madness, the witches in Macbeth deliver evil omens that are echoed through the play (note the bids), the ghosts in Richard III are there to speak for those that the crookback has killed, Caesar’s ghost appears to help drive Brutus and Casius to suicide, Prospero’s magic is a metaphor for the ability to write. It was not simply entertainment, or even spectacle, but for plot. Fantasy was not always a popular draw. Ben Johnson abhorred the supernatural in his plays, and his were the most popular plays during Shakespeare’s life. (Johnson did “stoop” to using supernatural events in later works, such as The Devil is an ***).

I have probably complicated the issue more than I have clarified, but the question is a very broad, and quite frankly, poorly chosen one. If you can I would focus on one play, instead of trying to take on all of Shakespeare’s fantasy.

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