5.0 lollipop - Why encrypt the device?

Android 5 offers two encryption features:

1. 
   

   Encrypt the device (phone)

   
   


2. 
   

   Encrypt the external micro SD card

   
   

I understand the benefit of 2.: if someone takes my micro SD out and wants to use it on another phone/computer, he won't be able to see my personal files.

But I don't see the the benefit of 1. over a simple password screen lock: nobody can take the internal memory of my phone out of the phone itself. So what is the advantage of 1. over a simple screen lock with password + SIM code lock?

In which precise situation would a thief be defeated by an encrypted device whereas he wouldn't be with a standard screen lock with password? (I'm not speaking about external micro SD for which I already understand the benefit of encryption)

To be more precise: is there a way for a thief of a phone with password screen lock but no device encryption to access the phone's internal data (let's say he doesn't know the password / cannot crack it).