God, a Being of perfect selfless love, decided sometime in the eternal past that he wanted others to possess the same kind of wonderful existence and righteous character he had always experienced. Because the character God possesses cannot be given by fiat, he devised a plan whereby he would teach and train others in the ways of righteousness. His plan led to the creation of man.
The culmination of God's creativity, after bringing out of nothing everything we see around us, was to make man (Genesis 1, 2). Of all His wonderful creations we are his greatest achievement. His love for us was so great that he decided to use himself as the template for our existence (Genesis 1:26).
Although God started out small with man (Adam and Eve), He blessed them (and us) with the ability to procreate so that countless others could also be made with the potential of living forever.
Man, in the Garden of Eden, choose to reject God and instead accept guidance from his adversary the devil. This choice, however, was expected and part of the plan to ultimately save humans from Satan's way of life.
It was destined, before man was made, that we needed to taste the full effects of sin and disobedience and learn the consequences of deciding for ourselves what is right and wrong.
Why were we created to have flesh? God made man of temporary flesh and blood so that we could learn eternal lessons through a life of trials and troubles on earth. His great desire is produce multiple billions of beings like himself in which to share eternity.
Why did God create man? Perhaps a better question is how could anyone who possessed perfect selfless love and unlimited power not want to share it with countless others?
Man's potential is to become literal sons and daughters of God and a member of his spiritual Family (Genesis 1:26). His plan will result in the overwhelming majority of all humans (99%+) choosing to live and think as righteously as he does. This is why we were created!