Why do we need App service environment when we can use App service in Azure ?

App services is meant for running web based applications,This allow you to start with free web based apllication

Think of App Service Environment as a premium tier to existing app services offerings. In a nutshell, it offers fully isolated and dedicated environment for running your service applications at very high scale. Deploying service apps inside app service environment not only makes sure of the secured access but also give customers the fine grained control of the network such as capabilities to control inbound and outbound traffic, high speed VPNs etc.

App service is having public end points and it can not be remote. App service which is provisioned can not be inside VNET. So to get isolated and dedicated environment we can go for "App service environment", Again it's dependent on customer who can effort to invest as it's a "Premium" service.