Why God has to come in human form?
If the spiritual knowledge is perfect and complete, the devotion and practice are the spontaneous subsequent steps for which there is no need of any effort. If the practice is perfect and complete,  the fruit is spontaneous. Therefore, all the efforts should be put only to gain the perfect and complete spiritual knowledge. Hence, Shankara told that knowledge alone can achieve fruit (Jnanadevatu…). The perfect and complete spiritual knowledge is possible only from God. But God is unimaginable and therefore to give this perfect and complete knowledge, the unimaginable God comes down in human form.

For this purpose, which is most important, God will never enter inert medium. The human form means the soul or awareness associated with the human body. Whenever God enters this world the soul is always an associated medium with Him. You should not say that the soul or awareness alone is the associated medium. If you say like that, the soul exists in birds and animals also and these birds and animals cannot give the spiritual knowledge to humanity. Therefore, the soul should mean the soul existing in human body only.

For God to come to earth, it make a human being out of diety.  Diety does not need human form.  Human form needs what diety offers in creation of guidance and love.

I do not think it is true. It is human being who behaves so Godly that he becomes God alike and hence worshiped.