Ethnicity

Recently, all students had to complete  a form indicating their race and ethnicity.  Considering I work with students from around the world I and my students found this form quite interesting.  First the students had to mark if they were Hispanic or not Hispanic.  Then they needed to mark if they were white, black/African American. Asian, Hawaiian, or Native American.  My Hispanic students had to mark one of the categories listed above.  What were they to mark as they do not consider themselves to be white or black, which is what I was to tell them to choose from.  They just laughed at me and compliantly marked one.  What about my students from the middle east?  I suppose they would be considered Asian, but they don't view themselves as Asian.  So, they too selected white while shaking their heads.  My Taiwanese student asked my about the Hawaiian category.  "Isn't Hawaii a state?  So if you live in Hawaii wouldn't you be American?  So you can mark Hawaiian but the Hispanic students can't mark Hispanic?  How many Hawaiians could there possibly be?"  One student did inquire about the purpose of the form, to which I did not have an answer.  Just another piece of information the government wants, I guess.  My question is, why is this important?  And, why do Hispanic and Middle Eastern students have to select that they are white?