Shirley Liu isn't as strict and rigid as Lao Mo; like most English teachers, she's very fashionable.
Classroom games like this are meant to generate interest in English on the one hand and to let students feel the rhythmic beauty of another language on the other.
On the other hand, it's hoped that students with a poor foundation will be able to speak up.
Indeed, exam-oriented education doesn't require oral skills; even those who can't speak English at all can score over 120 through rote memorization alone. But to make a breakthrough and fluently control spoken language is undoubtedly beneficial.
At the very least, speaking English correctly can significantly improve the accuracy of spelling words, preventing the kind of spelling mistakes during essay writing on exams, such as mixing up 'ae' with 'uo' and the like.