M855 and M856 was the new ammo that was developed for the M249. The 1:7 twist was used for the M249 in order to stabilize the longer M856. It is only 1.7 grains heavier, but is 6.3mm longer.
As they were going for ammo compatibility, the new M16A2 came with the same barrel twist.
Twist rates are important though. Shooting a heavy/long bullet from a slow twist barrel can cause it to lose static stability, and it will start to tumble. Shooting a light weight bullet through a fast twist barrel can cause overstabilization, which results in the projectile flying nose high, and landing base down. This can cause accuracy issues at longer ranges, as the projectile loses velocity faster and will be more prone to drift.
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