Why does sunscreen have an expiration date?

Thats a good question.
Sunscreen lotion has an expiration dates because *tadadadaaaa* the ingredients expire! Sunscreen that has gone too far beyond its expiration date becomes stale and ineffective.

If you don't see a date, the rule of thumb is that the active ingredients in sunscreen (like zinc, titanium dioxide and Parsol 1789) should remain stable and effective for about three years, according to David Leffell, M.D., professor of dermatology at Yale School of Medicine. But if it smells funny, feels lumpy or has a bizarro color, dump it. To keep your sunscreen as close to new as possible, store it in a dry spot at room temperature with the lid tightly fastened. Some of our favorites:

Coppertone Ultrasheer Sunscreen Lotion, $10; Clinique Body Spray SPF 30, $16.50; Lancôme Soleil Expert SunCare SPF15, $26; and Banana Boat Surf Sunblock SPF 30, $7.

http://magazines.ivillage.com/cosmopolitan/style/confess/qas/0,,426395_633965,00.html
http://parentcenter.babycenter.com/expert/bigkid/gsafety/70536.html

It's there to let you know when the active ingredients expire so that you know if it'll effectively protect your skin or not.
I'm not sure it's clear what question you are really asking here, the question you asked has been answered accurately. The chemicals and other ingredients lose their effectiveness over time. But you don't like that answer so I'm just not sure what you want to know.

How does it lose it's effectiveness? Things just don't last forever. Over time everything deteriorates, even chemicals and chemical compounds.

The combined chemical ingredients will lose its effectiveness to protect the skin from sunburn.

Never thought about this, but i guess its true.