Listello, translated from Italian, means lath. In the building world, a lath is a thin strip of wood or metal running horizontally that helps hold up another building material, often plaster.
There aren’t a lot of functional reasons for that little listello. What does it do? It’s just a band of tile; who needs it?

A listello is practically necessary when tiling an entire wall, floor to ceiling. Without that visual break, that large field of tile looks monotonous.

Listellos are more than just tiles of a different color. They tend to be decorative, textured, three-dimensional, and yes, expensive. But the expense should matter little, as you will be using limited quantities of listello tile. Listellos can be ceramic, porcelain, glass, and metal.