The fact that names, function parameters, and containers have reference semantics is a very basic design decision in Python. It affects the way Python works in many aspects, and you picked just one of these aspects. In many cases, reference semantics are more convenient, while in other cases copies would be more convenient. In Python, you can always explicitly create a copy if needed, or, in this case, use a list comprehension instead:
rows = [[''] * 5 for i in range(5)]
You could design a programming language with different semantics, and there are many languages that do have different semantics, as well as languages with similar semantics. Why this decision was made is a bit hard to answer -- a language just has to have some semantics, and you can always ask why. You could as well ask why Python is dynamically typed, and in the end the answer is that this is just was Guido decided way back in 1989.
