If I have selected a good password and kept it secret, what is the point of encrypting my home directory, as a setup option with some flavors of Linux offer during setup?

Won't the Linux permissions keep unwanted eyes away from my stuff?

The point is to protect against your disk being accessed outside of the OS. 

Encryption is useful against attackers who have physical access to your computer. Without it, it would be trivial to read out the content of your home directory, for example by plugging in a live boot USB stick.
