Why did he do this? Why did a man so apparently dedicated to bringing down the Empire simply stand back and literally let his world cave in on him? It's simply not clear about his reasons but we can certainly take a guess or two.
We first wonder if, as a big believer in the Force, he believed he was going to a better place. It's kind of like how Obi-Wan Kenobi let Darth Vader strike him down with a mortal blow – except, in that instance, Obi-Wan Kenobi knew during his encounter with Vader that he would be able to become a Force ghost and be able to guide Luke through his mission.
Saw had been a guerrilla fighter for many years. It seemed that he was still in this mode right up until the point he came face to face with Jyn. He was clearly actively engaged as a guerrilla prior to that point – that's why Galen Erso sent defector Bodhi Rook to him with his hologram message to get to Jyn.
So, based on that, Saw's head was still in the game and he was still a resistance fighter – until the devil in the sky came to town and blew it up.
At one point, he asks if Jyn is here to kill him as if the whole Bodhi defection was one long ruse for Jyn to kill him as part of some revenge plot for abandoning her some years before. He questions this as there was not “much of him left” to take. He's in a suit that actually appears to be holding him together and it acts as some kind of breathing apparatus like Darth Vader.
Maybe, he's tired of life, maybe he's tired of something. He's certainly not going to learn how to make beer anytime soon.
“Saw’s ailing health has not withered his resolve to fight.”
We may not ever know but, in some ways, this end to Saw Gerrera renders his character a bit of a waste in the context of the movie. He didn't really serve too much of a purpose other than rescuing Jyn at the beginning of the movie, some 15 years in the timeline before.