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I just came across uniswap recently. I know that it is a trade pool of two tokens that get their pricing from being put against each other with people buying one token with the other token as currency, thus creating scarcity and higher values for one and decreasing it for the other.

It is a cool idea and all, but what is it needed for? why do we need these small binary marketplaces

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On-chain market places allow not just humans, but, smart contracts to trade with each other. Automated market makers, like Uniswap, are also good for bootstrapping liquidity and allow semi-liquid assets to trade in all price points.

Furthermore, the user experience is superior, as you do not need to create a user account to trade on Uniswap.

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