When you lead by example, you create a picture of what's possible. People can look at you and say, "Well, if she can do it, I can do it," you make it easy for others to follow you. Mahatma Gandhi, Jack Welsh, Alexander the Great are leaders who changed the way the world and accomplished great things because they lived by example.
My personal favourite is Ingvar Kamprad. He quote “If there is such a thing as good leadership, it is to give a good example.” True to his words, Mr Kamprad is seldom besuited so at Ikea, suits and tie are not required. Despite his extreme wealth, he frequents cheap restaurants, flies economy class and haggles for bargains at the market in the Swiss village near Lausanne just as he conceptualise Ikea to be, modern furniture at a bargain. Leading and living by example allows the team to know that you'll also do whatever you expect from them, they'll likely work hard to help you achieve your goal.
Good leaders push their people forward with excitement, inspiration, trust, and vision and I inspire to be a leader who leads by example, simply because I believe trust and unity goes further than promotions and material rewards.