We know $\tilde H_n(X) \cong \tilde H_n(X,x_0)=H_n(X,x_0)$ for all $n\ge 0$.
Also, when $n>0$, we have $H_n(X)\cong \tilde H_n(X) \cong H_n(X,x_0)$.
However, when $n=0$, we have $H_0(X)\cong \tilde H_0(X) \oplus \mathbb Z \cong H_0(X,x_0) \oplus \mathbb Z$. If $X$ is non-empty and path connected we have $H_0(X) \cong \mathbb Z$. So, $H_0(X,x_0) =0$.
So why do we have $H_0(X,x_0)=0$ but $H_0(X) \cong \mathbb Z$?

As you said, for a pointed space $(X, x_0)$ the reduced homology is defined as
$$\tilde{H}_n(X) = H(X, x_0) $$
Considering the inclusion of the basepoint $\iota\colon \{x_0\} \to X$ gives a long exact sequence
$$\dots \to H_n(x_0) \to H_n(X) \to H_n(X,x_0) \to H_{n-1}(x_0) \to\dots $$
Since $H_n(x_0)$ vanishes for $n>0$ we see that $H_n(X) \cong \tilde{H}_n(X)$ for all $n>0$. However we can also see that $H_0(X)\cong \tilde{H}_0(X)\oplus \mathbb{Z}$, so these don't agree in degree $0$. Intuitively, the $0$-th reduced homology group is ignoring the component of the basepoint.
The intuition is that for pointed spaces we want to consider the information coming from the basepoint as being trivial. In singular homology this information is just a copy of the coefficient group in degree $0$ (indicating that a single point is connected) so our reduced homology ignores this group. Similarly, if $h$ is any homology (or cohomology) theory, then for a pointed space the inclusion of the basepoint induces a splitting
$$ h_*(X) \cong \tilde{h}_*(X)\oplus h_*(x_0) $$
This splitting is more interesting in theories like $K$-theory where $K^n(x_0)$ is non-zero for infinitely many values of $n$.
The reason we care about reduced homology is because sometimes it behaves more naturally than un-reduced, for example the suspension theorem $\tilde{H}_n(X) \cong \tilde{H}_{n+1}(\Sigma X)$ is not true for unreduced homology. Overall it's a more appropriate functor for the category of pointed spaces.