Why do Bluetooth devices need pairing?

Answer: It establishes shared keys that can protect the wireless connection

It increases the radio power so signals can travel farther — Pairing does not boost radio power or extend range. Range depends on the radios, antennas and environment. The pairing process instead supplies keys that can protect communication within that range.

It reduces the electrical power required to transmit each signal — Pairing is not a way to reduce the electrical power needed for each radio transmission. Power use depends on factors such as radio settings and how often devices communicate. Pairing instead establishes security information.

It establishes shared keys that can protect the wireless connection ✓ — Pairing establishes shared keys that can be used to encrypt communication between Bluetooth devices. Some methods also help verify the other device's identity. When keys are saved for later connections, that is called bonding; security depends on the method used, not just having clicked Pair.