Art is useless because its aim is simply to create a mood.

Frank Stella, Gobba, zoppa e collorto (1985)

It is not meant to instruct, or to influence action in any way. It is superbly sterile, and the note of its pleasure is sterility. If the contemplation of a work of art is followed by activity of any kind, the work is either of a very second-rate order, or the spectator has failed to realise the complete artistic impression.

A work of art is useless as a flower is useless. A flower blossoms for its own joy. We gain a moment of joy by looking at it. That is all that is to be said about our relations to flowers. Of course man may sell the flower, and so make it useful to him, but this has nothing to do with the flower. It is not part of its essence. It is accidental. It is a misuse. All this is I fear very obscure. But the subject is a long one.

Oscar Wilde, Letter to Bernulf Clegg

What hides under this aestheticized "uselessness" of art?

Well, for one thing, a rationalization and universalization of Wilde's homosexuality. But that is a relatively trivial thing. 

In the late 19th century, aestheticism and "art for art's sake" become a means to defend art against its crude bourgeois instrumentalization. But this defense is already a compromise. From service to the sacred, which the modern world no longer appreciates or recognizes, art retreats into "uselessness," a refusal to serve the grosser requirements of bourgeois valuation. Because the sacred has been dispossessed of value, its vestigial presence in art can only be (weakly) upheld by a fetishization of art's uselessness, i.e. its material uselessness.

Clive Bell's theory of significant form shows more insight than Wilde's. Bell recognizes that form has metaphysical significance:

Significant form stands charged with the power to provoke aesthetic emotion in anyone capable of feeling it. The ideas of men go buzz and die like gnats; men change their institutions and their customs as they change their coats; the intellectual triumphs of one age are the follies of another; only great art remains stable and unobscure. Great art remains stable and unobscure because the feelings that it awakens are independent of time and place, because its kingdom is not of this world. [my emphasis] To those who have and hold a sense of the significance of form what does it matter whether the forms that move them were created in Paris the day before yesterday or in Babylon fifty centuries ago? The forms of art are inexhaustible; but all lead by the same road of aesthetic emotion to the same world of aesthetic ecstasy. 

There, in Bell's words, we have some indication that in its infancy, formalism was not the sterile thing it became after Clement Greenberg got a hold of it. Greenberg  "justified" formalism by reformulating it as a technocratic procedure for "entrenching" each art medium in its "area of competency." Making formal autocritique the focus of art practice was supposed to safeguard art from assimilation into kitsch. In actuality, this microscopic narrowing of focus ensured the complete desacralization of abstraction and, inevitably, its banalization.  This is evident in the utter vacuity of Frank Stella's postminimalist output, the precursor of most contemporary abstraction.

Nothing hastened the transformation of abstraction itself into kitsch than Greenberg's effort to remove from abstraction any reference to or suggestion of supra-formal content.