You just need to gain a clearer picture of the circumstances in which forcing a reshuffle of the deck is useful. Imagine that:
You have drawn a lot of the useful cards from your deck, and few of your victory cards. Obviously reshuffling will save you from the inevitable victory-card-heavy hands.
You have just bought a powerful card, that you want a chance to draw again immediately. Or if you have just played one or more of your best cards, that you want a chance to draw again immediately. Why wait to cycle through the whole rest of your deck, before you get that chance?
The Chancellor defends against the Bureaucrat, the Spy, or any other situation where you know the top card of your deck is not something you especially want to be part of your next hand.
So there are circumstances when it's better to reshuffle your deck. (Though of course, there are equal and opposite cases where it's definitely better not to reshuffle your deck, so you have to be on the ball if you're going to play with the Chancellor, he's not a card you want to just automatically play any time!)
Obviously he has a big downside, in that he takes up an Action. But, if you weren't going to spend that Action on anything else, he's all upside compared to a Silver. Early in the game, before your deck is filled with good Action cards that you really want to play, and when you have a clear idea of the total composition of your deck, the Chancellor is probably just plain better than a Silver. And never underestimate the power of getting off to a good start in the early game!