Couldn't we just cancel existing order and enter new order?
Is there any other reason apart from a communication overhead that now we need to send 2 messages vs just 1 message to cancel replace?
Order Cancel-Replace might save you from losing priority in the book (for instance when cancelling some of the remaining shares - check the venue rules!).
The communication overhead is very significant - it halves the round trip time (otherwise you have to cancel; wait for confirmation; re-send -- if you don't wait you risk getting double fills).
At any given time you have your order active in the book (unless rejected).
Margin/risk checks might also be faster (vendor-specific of course)
It is aimed at maintaining order book priority based on most venues price/length/time order book priority logic. The order cancel/replace request is used to change the parameters of an existing order and the intention is not to cancel an order outright or cancel remaining quantity after a trade. Venue FIX API's are coded to see 2 distinct differences between cancel and cancel/replace. However, certain amendments to the order will cause it to lose it's place in the order book.