When or why should a product marketing function carve out an industry marketing role vs just have traditional product marketing run this?

I've tackled this question a bit in other answers already, and I encourage you to check those out as well, but in essence -- industry marketing is one specialization in a mature product marketing organization, focused on key value propositions and message by industry. It's required when your ideal customer profile's needs, challenges, and the value that you can bring to their problems varies enough by industry that it's difficult to have "universal" positioning apply to each of your target industries.

A company that has multiple products, different buyers, and leans towards vertical SaaS needs solution oriented messaging in order to speak to the aspiration of the buyer. In this case, industry marketing is a priority to build. When you speak to value and pain of the buyer vs product centricity per industry, you're message not only becomes authentic, but you're speaking to a critical path for the buyer to succeed, their aspirations, their problems, and you paint a vision which shows how they can be succesful. This type of messaging naturally requires more than one product as the pain involves multiple products in order to solve their problem, all wrapped around a single message. 

Typical product marketing is naturally focused on the product, and because of this, makes it very hard for traditional product marketers to pivot into this solution oriented messaging. 

Industry Marketing is useful when a company has a wide portfolio of products or solutions that create value for a number of industry segments. The Industry (or Audience) Marketing team tells an integrated story about the outcomes that a set of solutions can deliver for that set of customers. When the sales organization is organized around customer segments, having Industry Marketing counterparts can be an effective way to make sure they get the right messaging for their prospective customers throughout the sales funnel.