FATEs, Hunts, levequests (if you're still levelling or trying to fill the Challenge Log), Beast Tribe dailies, relic weapon quests... there's plenty of ways for gear to be degraded. And it should go without saying that instanced content accelerates the degradation rate, and especially if your character is KO'd (regardless if they are KO'd in instanced or open content, being KO'd degrades your gear even more, so if you're wiping over and over again, it's very easy to suddennly end up with badly worn gear.).
Marathon running instanced duties over and over again with little break will definetely also wear your gear down to almost nothing rather quickly. Getting into the habit of repairing your gear at a mender regularly can avoid that though.
And the reason for gear degredation is not just for it to be a gilsink (although that is definetely a major part of it). Gear degredation has been a part of the game since 1.0's launch, and it's main purpose was actually to provide a reason for Disciples of the Hand to exist - the idea was that SE expected you to level DotH classes to repair your own gear (and to switch to the required crafter class when you needed to do so), with npc menders being actually few and far between (and in 1.0 an npc mender would never repair it all the way to 100% condition, the best you could get was 99% - this changed in ARR though where npcs now repair all the way to 100%, but as in incentive to still repair your own gear you can double your gear's condition to 200% if you repair it yourself).
It also serves as FFXIV's equivelant 'death penalty' to FFXI's 'lose EXP on death', as a means of increasing challenge (the thinking is that you only really have to be concerned about it if you're dying a lot, if you're not then it's not really a problem, at least theoretically.). Basically, "there's no such thing as a free lunch": the 'free lunch' in this regard is doing content without some cost to the character, whether it be gil, EXP or something else, everything in life has a cost, and whether you are willing to pay it.