I'm assuming G-body here, but the idea is that the insulation keeps warm air off the colder compressor suction line going back to the compressor and hotter, compressed gas going from the compressor to the condenser. The evaporator isn't 100% efficient in absorbing all the heat from the air passing over it, so humidity in the air may condense on the suction line. It's more of sweat control than anything else on the suction line. Don't want water dripping all over the hot engine/exhaust all the time. Depends on relative humidity around that suction line and if the system is operating correctly. The compressor discharge line insulation is for heat/burn protection but it's positioned lower so it's tough to get burned there. But they did it anyway.
When I redid my 84 hoses, I went to an industrial hose shop to get them made because at the time, NOS ones were hard to find and it was actually a lot cheaper to have them made reusing my old hose ends. They installed new black foam sleeves over the hoses that looked like it belonged there. Since the insulation was one piece, the hoses couldn't be connected prior to putting the insulation on. I suppose you could slit and glue the insulation around the hoses if they're still made up to the system.
Some of the industrial supply companies carry the stuff. Check with some local A/C shops or hydraulic hose shop. They may have stuff you've never heard of.