Difference between a drink offering and a food offering in Exodus 29-30. What was their purpose while instituting?
In the Pentateuch, written from an ancient Near Eastern (ANE) milieu, rituals were performed by all ancient peoples for the gods. God used what the Israelites were familiar with and what they had in their possession to ritually represent God, his throne, his glory, his holiness, etc. In a similar fashion, Jesus used what was available already in the passover meal (bread + wine) to give it a new significance and it became the Lord's Supper (pointing to his death), and today some of us imitate this meal in our churches with bread + wine or grape juice.
The purpose of instituting these offerings were for ritual purposes. Rituals, libations (drink offerings) and sacrifices (various) already existed in the ANE way before Moses in Egypt and Mesopotamia. So, again, God used what was already available and modified it accordingly the right way--the holy way, in contrast to the pagans.
The sacrificial offerings (food) and the drink offerings (liquids / wine) were part of ritualistic meals. God doesn't need to eat, so it's clearly ritual. It represents communion, not that God is actually hungry.
Let me cite from Carpenter:
A “libation offering,” or drink offering, is described in 30:9. The articles used on the table that was placed in the holy place for libation offerings (cf. also 2 Chr 29:35; Psa 16:4; Jer 44:17, 19, 25) are described in Exod 37:16; cf. 25:29. Although these were more or less secondary offerings, they also accompanied other offerings as here. Wine (cf. Num 28:7) was the liquid used most often. Libations were normal with the burnt offering of well-being (peace offerings; Num 15:1–15; Lev 23:13, 18, 37). Since a meal needed this kind of accompaniment, it is not surprising to find this type of offering...Libation offerings consisted of liquids: wine, oil, or water poured out at the altar (see 29:40). Only wine plays a significant part in the basic offerings described in Leviticus (cf. Num 28–29).
Eugene Carpenter, Exodus (ed. H. Wayne House and William D. Barrick; vol. 2; Evangelical Exegetical Commentary; Bellingham, WA: Lexham Press, 2012), 257.
Burnt offerings were completely burned up on the altar, and these offerings in general were intended to establish a relationship of acceptance and appreciation between the offerer and God. The slaughtered sacrifices here refer to peace offerings, and their special emphasis is the communal sharing and celebration of the worshipers...
These sacrifices were wholly dedicated to the deity and therefore were entirely burnt upon the altar. The “peace offerings” or, as many now prefer, “offerings of well-being” (שְׁלָמֶיךָ) were shared before God by the priests and the sacrificers (cf. Lev 3; 7:11–34)... The offerings that were wholly burnt were gifts to Yahweh indicating the total dedication of Israel to Yahweh, while the offerings of well-being provided a sacred meal and fostered fellowship. Part of these offerings were burnt on the altar, part eaten by the participants in the ritual ceremonies.
Eugene Carpenter, Exodus (ed. H. Wayne House and William D. Barrick; vol. 2; Evangelical Exegetical Commentary; Bellingham, WA: Lexham Press, 2012), 145–146.
And, finally, the issue of blood in the OT sacrificial system:
The covenant involves life/death commitment by both parties, and the blood represents the life/death commitment of each party (see v. 8 below). McCarthy has surveyed the Israelite and ancient Near Eastern, as well as Greek, concepts and use of blood and finds that there was no “widespread belief in the sanctity of blood” per se as is often maintained, and that Israel’s attitude toward the use of blood was unique. Israel connected the meaning and significance of blood to life, not death. He found this attitude present in Exod 24:5–8 and that this section is probably quite ancient. This use of blood was a solemn but joyous occasion for Israel, and in this passage a time of communion is celebrated
Eugene Carpenter, Exodus (ed. H. Wayne House and William D. Barrick; vol. 2; Evangelical Exegetical Commentary; Bellingham, WA: Lexham Press, 2012), 146.