A bug poping out with some files failed to download, returning 404. Looking closer at the issue, turned out the files that failed contained ampersand "&" in the filename. PHP would translate the "&" in request path as a key in $_GET variable. So something like:-

would result in PHP $_GET as:-

urlencode'ing' the path is not enough because PHP would still translate that to an ampersand. drupal_urlencode solve this by double encode the path so when PHP try to parse it into $_GET variable it would still see the encoded version. Since we access the path using Drupal's q variable, Drupal alreading take care decoding it to the actual value.