While serving no discernable purpose, Scarecrows do an adequate job (especially in the dying light of the day) at scaring the absolute pants off the uninitiated RUST player.
They bare a striking resemblance to another player, especially when viewed at an angle.
Some players deploy them around their base to create potential distraction targets in the event of a raid. Others place them outside of their enemies’ bases as a symbolic warning. You can pick them up after deployment at the cost of a portion of the item’s durability.