Look at what happened in Russia with Brittney Griner, who was arrested for a tiny amount of pot and is now being used as a bargaining chip.
Now imagine if any country could arrest any diplomat on any pretext at any time. Unlike Griner, these are often fairly significant people in the government, who the country would really want back – so the temptation to do this would become extremely high. Just manufacture some charges, arrest them, bam.
The only way to completely prevent this is via diplomatic immunity.
Also note that contrary to the usual portrayals they’re not completely above the law. First, their home country can revoke it – if eg. a diplomat commits rape or murder, and the home country is convinced it really happened, then their diplomatic immunity is likely to be revoked as a way for their country to basically say “this person doesn’t represent us; we wash our hands of them.” Second, in the worst case, the host country can just eject them.
But in situations where the host country and their home country disagree, it’s important that the diplomat be allowed to go home safely, otherwise nobody would want to send anyone important as diplomats, which would make negotiation harder.
(Admittedly this is slightly less true today in an age of instant worldwide communications.)
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