Sequence files are binary files containing serialized key/value pairs. You can compress a sequence file at the record (key-value pair) or block levels. This is one of the advantages of using a sequence file. Also, sequence files are binary files, they provide faster read/write than that of text file format.
Sequence files allow you to solve this problem of small files. They are the files containing key-value pairs. So, you can use it to hold multiple key-value pairs where the key can be unique file metadata like filename+timestamp and value is the content of the ingested file. Now, this way you are able to club too many small files as a single file and then you can use this for processing as input for MapReduce. This is the reason why sequence files often are used in custom-written map-reduce programs.
Hope this answer helps you!