Even though some people believed that searing locks in the moisture or "seals in the juices" of the food, it has been scientifically shown that searing results in a greater net loss of moisture versus cooking to the same internal temperature without first searing. Nonetheless it remains an essential technique in cooking meat for several reasons:
Typically in grilling the food will be seared over very high heat and then moved to a lower-temperature area of the grill. In braising, the seared surface acts to flavor, color and otherwise enrich the liquid in which the food is being cooked.
The belief that searing meat "seals in the juices" is widespread and still often repeated. This theory was first put forth by Justus von Liebig, a German chemist and food scientist, around 1850. The notion was embraced by contemporary cooks and authors including Auguste Escoffier.
Simple experimentation can test the theory: cook two similar cuts of meat, searing one first and not the other. Weigh the end results to see which loses more moisture. (The Food Network program Good Eats carried out such a test in episode EA1H22, Myth Smashers.) As early as the 1930s, such experiments were carried out; the seared roasts lost the same amount of moisture or more. (Generally more, since searing exposes the meat to higher temperatures.)
Moisture in liquid and vapor form can and does continue to escape from a seared piece of meat. For this reason, searing is sometimes done at the end of the cooking process to gain the flavor benefits of the caramelization as well as the benefits of cooking for a greater duration with more moisture.