I think it shows that they are a) looking to operationalise the mutual defence treaty with military capability b) are looking for a "workhorse" jet to do lower tier missions more cheaply than a big F15S can do c) buy into the JF17C ecosystem to develop home grown munitions which they can easily integrate themselves etc ie grown her local aviation industry.
The Saudi fleet is all Tier#1 and very expensive to operate. They are looking for something similar to what they had with F-5s when they were in the Saudi fleet?
btw - The Tornadoes are end of life btw, so they do need to replace the function of those jets with a platform. The UK has retired them, Germany is moving towards retirement as are Italy. Saudi have 81 of them to replace.
( I am still sceptical, but the above are some logical reasons why they may want to procure ).