Why do we pray for the dead?

We have to remember that God sits outside of time. He sees creation from a different perspective, in an eternal sense. And because God is outside of time, our prayers today can apply to anyone regardless of where they fall on our time continuum.

When we pray for the 'repose of the soul' of someone who has died, we consider it like praying from the beginning of their life, from the beginning of time even, for them to be at peace in God's presence (as opposed to being in torment in his presence, which is a very real concern). We pray from the beginning of time, before they were even born, that God forgive them every sin. 

It is our ongoing human cry for salvation. We want our loved ones to be in God's presence in eternal peace, not torment. So we cry out for this from the beginning of time.