When I say Allah has no needs it means He does not need to eat, drink, sleep, have sex, have children etc. Needs are something associated with mortality and creation. Since Allah is Immortal, He has no needs. Allah's dominion does not increase or decrease if we don't worship Him. This does not mean Allah is not Loving.
"The Loving" is one of Allah's names as He said about Himself:
"And He is the Forgiving and Loving" (Qur'an 85:14).
Love is just a word which must be translated in action and it becomes obedience in the case of His creation, human beings, and mercy in case of the Creator, Allah.
You can see that when love is translated into action it is mercy and His mercy is unconditional. You receive Allah's mercy whether you are an obedient servant of Allah or you are a non-believer. Love must be translated in action, attitude and behavior, otherwise it is just a word without meaning. Let us take a few examples:
A man may say to his wife "I love you" but he beats her and does not provide for her. Does he love her?
A child says to his parents "I love you" but he disobeys them most of the time. Does he/she love them?
You see that love without right attitude and behavior is just a word without any meaning.
Allah's love is translated in His attributes of forgiving, compassion and mercy. Look around and you will find that Allah's mercy is spread all around. All humankind irrespective of their belief in Allah and their character whether they believe in Allah or not; whether they are good-doers or evil-doers; they all obtain their sustenance from Allah. Many evil people are very rich because Allah decided to give them all the wealth and good things of this life; this is because Allah is Ar-Raheem (Merciful). Allah is also Ar-Rahman for the believers in Him; they are good-doers. They receive special blessings from Allah, that is, happiness and contentment in this life and reward in the hereafter.
In the Qur'an Allah says that He does not love those who reject Him (3:32), does not love those who are transgressors (2:57, 140, 5:87, 7:55), does not love those who are evil-livers (5:64), does not love evil talk (4:148) and others. In all these cases love is connected to the deeds of a person.
At the same time Allah does not deprive them of anything in this life. You will not find that all good people are rich and all sinners are living in poverty and a wretched life. Allah gives a person life-long opportunity to turn away from the life of sin and disobedience and receive His forgiveness. Conversely, Allah says, "Say, if you love Allah, obey me , Allah will love you and forgive you your sins, Allah is Forgiving and Merciful" (3:31). If you love Allah show it in your conduct and obey Allah and His Messenger, for obedience of His Messenger is the obedience of Allah (4:80). It means our expression of love is in obedience.
See what Allah also says in the Qur'an, "Say: O My slaves (mankind) who have been prodigal to their own hurt! Despair not of the mercy of Allah, Who forgives all sins. Lo! He is the Forgiving, the Merciful..." (39:53-58). Here the message is that those who commit evil are doing wrong and hurting themselves in this life and the next, however, Allah's forgiveness has no limits and the only condition is asking for forgiveness and repentance (not committing wrongs again knowingly).
Prophet Muhammad PBUH said:
Allah created mercy with a hundred parts. One of which was sent down upon the jinn and human beings and other living creatures. It is out of this one part that they love each other, show kindness to one another, and even the animals treat their offspring with affection. Allah has reserved the remaining ninety-nine parts for his true worshippers on the Day of Judgment.
Let me also address the purpose of our creation. I will focus on Quran only because only our creator can tell what is the purpose of our creation.
"We did not create the jinn and men except to worship us." Al-Qur'an 51:56
So relative to Allah, we were created in a means or a way in which Allah has chosen to manifest his attributes of creation, mercy, grace etc and he could have chosen another one. But relative to us as human beings, we know that our purpose is to worship Allah. As I said, Allah does not need our worship. When he created us to worship him, he didn't create us, out of a need for our worship, because Allah has no needs.
Allah says in a famous hadith qudsi:
If all of you, jinn and mankind, were to worship like the most righteous amongst you, it would not increase the dominion of Allah in any way shape or form. And if all of us, jinn and mankind ... "
Therefore when we look for the purpose of worship, we have to look into man. Allah created us to worship him, because WE NEED to worship him. It is something he has given us as a means of benefiting ourselves. We are the ones who benefit from it. Worship has been established, fundamentally for the growth, the spiritual growth of man. This growth takes place through the remembrance of Allah. When you look at all the different aspects of worship, you will see the core of it is focused on the remembrance of Allah.
Worship is there for us to remember Allah. And it is in the remembrance of Allah, that we achieve that consciousness. Because it is when we forget Allah, that Shaytan (Devil) causes us to disobey Allah and fall into sin. So it is only in His remembrance that we can attain salvation. All of the various acts of worship help us remember Allah in order to grow spiritually.
Allah has said that he has created us to test us, to see which of us is best in deeds. He is not testing us to know, in the sense that he doesn't already know, but this world is a test for us in order again that we can grow spiritually.
We cannot develop this spiritual characteristic of generosity unless some of us have more than others and then we are required to give of the wealth we have. When we give, we grow. Similarly, if we were not in a position where others had more then us then we wouldn't have the ability to develop the higher spiritual quality of contentment, patience, satisfaction in what Allah has given us.
So it is all there in order to bring out the higher spiritual qualities, which enable us to attain the state, which makes us suitable and eligible to return to paradise. The paradise from which we were created, we were created in paradise and for paradise. Through our choices we have left, in this life, a field of testing, where we can grow to a state where we deserve paradise.
The purpose of this life is the worship of Allah, this life is a test. A test for us, will we worship Allah, or will we forget Him. This is where our focus has to begin.
I know it has been a long reply but I hope you find answer to your questions.