Let me give you one reason why we want to think of $\textrm{SU}(2)$ as the unit sphere: A priori, $\textrm{SU}(2)$ is only a closed subgroup of $\textrm{GL}_2(\Bbb{C})$. Now it is a topological group (specifically a matrix Lie group), meaning to say in the simplest terms it is a topological space and a group at the same time. Now suppose I want to understand topological properties of $\textrm{SU}(2)$, namely whether or not it is connected/path connected/compact, etc.
Now all these things are not easy to see if you look at $\textrm{SU}(2)$ as just a bunch of matrices however: upon identifying it as a topological space with $S^3$, all these properties become obvious immediately. The 3-sphere is connected, path connected and is compact.
Something else that we get from this identification is we know that $S^n$ for $n > 1$ is simply connected. In simplest terms, any loop in your space at a point $x_0$ can be deformed continuously to the point $x_0$. It follows that $\textrm{SU}(2)$ is simply connected by it being homeomorphic to $S^3$. In algebraic topology, we say that
$$\pi_1(\textrm{SU}(2),x_0) = 0$$
and this is something very powerful: We already have a covering map $\Phi : \textrm{SU}(2) \longrightarrow \textrm{SO}(3)$ that I have defined here. The fact that the fundamental group of $\textrm{SU}(2)$ is trivial tells us immediately that it is the universal cover of $\textrm{SO}(3)$. Once we know the existence of this universal cover, in turn we can classify all up to isomorphism all non-based covering spaces of $\textrm{SO}(3)$.
And all of this came from just looking at $\textrm{SU}(2)$ as the 3-sphere!