Why does my iphone 12 need a software update to be able to have cellular service?

Hi MarinBayArean

Welcome to the Apple Community.

If you mean an update from your carrier:

Manually update your carrier settings on your iPhone or iPad - Apple Support

says:

"Carrier settings updates let your carrier provider update carrier network and related settings

to improve cellular network connectivity and performance. 

Carrier settings updates can also add support for new features like 5G or Wi-Fi Calling".

If you mean an iPhone iOS software update:

It would seem the carrier software and iPhone software need to remain compatible, so they work together.

Apple recommend we use the newest compatible software update with our computers / devices.

All the best :-)