Why do individuals (particularly children) exhibit challenging/inappropriate behavior (misbehave or act out)?

They do it for attention. Everyone loves attention & especially children. If they don't get the kind of positive attention they desire, acting out still draws attention to them and often times, more than they would get by not acting out. I believe in my opinion, children act out for attention. Positive, negative it matters not, so long as they are getting your attention, that's all that matters!