For 3 reason in houses as well as in factories:
1/ Simple chimneys take the smoke away from a fire because the warm air inside them rises; taller chimneys have more height for this to happen so work better. This explains 10' chimneys sticking above single story houses but not really big modern industrial chimneys; it would be much cheaper to use a fan! (Early industrial chimneys were built for this reason before mechanical ventilation was economic.)
2/ Various eddies and back drafts happen around house roofs on windy days. These can blow blasts of smoke back down the chimney into a house. Having the chimney a bit above the surrounding roofs considerably reduces this. This is why chimneys tend to stick at least 3' above the roof even on tall buildings.
3/ Probably the most important reason is pollution. Certainly this is the reason for really big modern industrial chimneys. By releasing the nasty gases that come out of chimneys at great height they will have mixed with a lot of air and should be at "safe" levels by the time they get back to ground level and people breath them in. This doesn't stop pollution of the wider area or planet but it does avoid the problem of extreme air pollution at the outlet point.
