There are a variety of reasons to use hand crossbows!
Combat practicality. The Crossbow Expert feat grants that sweet Bonus Action shot with an already-loaded hand crossbow. Even without that, holding one in each hand means you aren't held down to the one-attack-per-round drawback the Heavy and Light crossbows suffer due to the Loading property.
Inconspicuousness. Maybe you need assassinate the Evil Count at the Grand Ball? That big, Heavy Crossbow's not gonna pass the guards' ocular pat-down, but the Hand Crossbow in your big, fancy coat might get by easily. Maybe you want to back up your buddy in the standoff in the bar? Lugging out your big 'bow is slow and gives everyone time to react, but you can relatively realistically quick-draw with your hand crossbow (assuming you thought to have it strung and a bolt ready, for whatever reason).
One hitter... ness. If you're looking to set up an ambush, having that single shot ready to go can be very worthwhile. Drow, for instance, are notorious in game for shooting from a hiding place with a poisoned hand crossbow bolt before closing to melee, a fighting style that works very well with the HCB/Shield combo. The light crossbow might do slightly more damage, but it'll take another action to strap on that shield while the bugbear you just cheesed off is charging down on you.
But ultimately, it's a cool character concept. If you want to play a gunslinger, or a pirate, or fantasy Trinity from the Matrix, having a long crossbow sorely clashes with the core of a character who would rather carry a revolver or a flintlock, or just a bunch of throw-away guns, one handed.
There are two aspects to this question:
Why have material components that are free or inexpensive?
Why make them all different?
Why have Inexpensive material components
Most of the time, the presence of a free material component will just mean the caster needs to interact with an arcane focus or component pouch. They will need a hand free to do this.
There are spells that require no material component. These may be especially useful, for example, for a ranger with the War Casting feat, wielding a sword and shield or dual-wielding — he has no need to unwield a weapon or shield and then handle his component pouch (note, rangers do not get arcane foci) to cast such a spell.
Spells that lack one component or another can be handy when some game condition or other deprives them of the ability to use the component (that being silenced, bound, or deprived of a component pouch/arcane focus.)
Why have material components be unique, individual items?
While a few somatic or verbal components are specified in spell descriptions (notably, Burning Hands mentions touching one’s thumbs together) material components are specified in each spell’s stat block. Why?
Eye of newt, and toe of frog
One reason why this D&D tradition has survived (or been revived) is the same reason material components appear in Shakespeare: they do a good job setting a mood.
On the other hand, I think we could agree that calling out every syllable of every verbal component or gesture of every somatic one would simply be tedious.
Scrounging for components
If a caster doesn’t have access to a component pouch or arcane focus (generally because it was stolen or confiscated, but there might be other reasons) then individual components can play a role in game play. Some will be trivial to acquire, others difficult.
As such, they’re a little like encumbrance rules: some groups will never use them, many gloss over them most of the time — but they are there in case the situation calls for them. For example, Umbranus shares this memorable escapade:
In one game with an earlier edition my char could once save the party
after we were caught and tied up because I remembered how easy it is
to get the components for unseen servant. Back then it had no somatic
components but material component was similar to today: Piece of wood
and string. So I worked my clothes to pull a string out and scratched
the wood pole I was tied to until a piece came loose.
Without those
components this situation would not have been as noteworthy. And I
wouldn't still remember it.
Best Answer
To answer your first question:
It's a one piece mirror of highly polished metal if it is adventuring equipment.
To answer your second question:
Because it was cheaper than a silver mirror, originally
One of the things the D&D 5e tried to do during development was "unify the editions" somewhat. If you reach back to Original Dungeons and Dragons in 1974, on the Men and Magic book's equipment list (page 14) we find:
In play, the steel mirror was more durable and less likely to break if you fell into a pit trap (a common enough occurrence). Depending upon whom your DM was, it may or may not have been "as good" as a silver mirror in reflecting things as you used one to look around corners (one needed to be wary of medusas, yes? Dungeons are a dangerous place!)
And it was more durable
Durability quantified:
The AD&D 1e DMG (p. 80) had this note for mirrors (Table: Saving Throws for Magical and Non Magical Items):
The "Metal, hard" item's save versus normal blow was a 2, but a mirror's was a 15.
The "Metal, hard" item's save versus a fall was a 2, but the mirror's was a 13
... and so on for a dozen other saves.
One of the biggest benefits of the steel mirror when originally outfitting your dungeon delving character was that it cost less, which allowed you to perhaps buy better armor for your character, a better bow, or maybe buy a few more flasks of oil. Everyone rolled the same 3d6 x 10 for starting gold. Having to pick your starting equipment was a case of shopping on a budget.
In mosts games that I played in that era, the two kinds of mirrors were functionally identical. The amount of verisimilitude engaged in at a given table will inform how a DM chooses to differentiate them functionally, if at all, in D&D 5e. So you could call this "tradition" and be close to correct.
Mechanically, D&D 5e doesn't demand a saving throw for every item in your pack if you fall into a pit trap - some of the older editions did. A DM could, if you are walking around with a mirror in your hand when you fall into a trap, call for some kind of check or save to see if you dropped it (Dexterity check?). The DM could also rule that the fall broke it - unless it is a steel mirror.
That - durability - is a likely reason that it's the default mirror in the Basic Rules Equipment Table: what is listed is (in the main) adventuring gear rather than items from a boutique catering to the rich nobility.
Why was that distinction made?
The game was allegedly set in some vague "feudal or medieval time" (thanks to Original D&D's connection to the Chainmail miniatures war game), but within Swords and Sorcery (and Fantasy) literary genres some Renaissance era norms and tropes are not uncommon to find (see Tim Powers The Drawing of the Dark as an example). There are also plenty of anachronisms in the stories that inform D&D's general setting: JRR Tolkien's The Hobbit featured Bilbo Baggins having a clock on his mantlepiece.
There is some more historical info here. (Thank you, @MarkWells)