What are the effects of not understanding that we are created for worshipping Allah?

The purpose of worship is to attain Paradise. So, the rules of worship are there to keep us on that path (Siraatul Mustaqeem) in order that all aspects of our lives are pleasing to Allah because another definition of worship is doing what is pleasing to Allah. If whatever you do is pleasing to Allah, you are worshipping Allah. Worship is a need which we have because if we want to achieve Paradise, then that is the only way.

When difficulty comes, we fall apart. When good times come, we become so much happy that we forget Allah and so we lose. We are in a lose-lose circumstance where the times are good or bad, we are losing. Whereas the way of the believer is that when times are good, he/she is a winner and when times are bad, then he/she is a winner. As Prophet Muhammad (ﷺ) had said,

‏ "'Ajaban li amri al-mu'min.  Inna amrahu kullahu lahu khair - wa laisa dhalika li ahadin illa al-mu'min:  In asaabat-hu sarraa' shakara fakaana khairan lahu, wa in asaabathu dharraa' sabara fakaana khairan lahu." "How amazing is the affair of the believer.  Everything is good for him - and that is for no one but the believer:  If good times come is way he is thankful and that is good for him, and if hardship comes his way he is patient and that is good for him." [1]

When good comes to them, they thank Allah and Allah rewards them for it and whenever evil befalls them, they are patient with it and Allah rewards them for it. That is the win-win situation. Our life is between times of good and times of evil - either things are good or bad. So, if we can be patient when things are bad, then those bad times are still being recorded on our good deeds. It is good for us. And if we can be thankful to Allah when times are good, that is also on our scale of good deeds and we are rewarded for it as Allah said,

And (remember) when Your Lord proclaimed: "If You give thanks (by accepting faith and worshipping none but Allâh), I will give You more (of My Blessings), but if You are thankless (i.e. disbelievers), Verily! My punishment is indeed severe."[2]

If you are thankful/grateful, I (Allah) will increase whatever you are grateful for. Whatever Allah has blessed us with and we are grateful for, He will increase it due to our thankfulness. Thankfulness is something critical in our lives. We need to be there and be thankful to Allah when He has given us the good.

References:

[1] Muslim No. 2999

[2] Surah Ibrahim: 7