Improvements and advancements would stagnate due to the 25x duplicated effort, and resources would be lost in keeping those projects happy. Also, any potential user looking to switch would be deluged with options, which is what crippled desktop Linux.
While I do not understand enough about Pine to know why they specifically made the business decision to gut their dev community and go with Manjaro Linux, my guess would be something along the lines of Manjaro's widespread dominance as a top Linux distro backed by a powerful foundation. Pine is pivoting to what they have decided is their future: a full-stack hardware to software open source offering that in their eyes would have a better shot at cracking open the phone market.
They probably were aware of the consequences, but have bet on making it big and creating a new, streamlined ecosystem after extinguishing this one. It remains to be seen if they will succeed.
People keep saying this, like too much effort is a bad thing. But OP makes it clear that there's very little duplication of effort in the Linux-on-phone/mobile/SBC community - most developments are shared community-wide. There are some technical divergences (Alpine/musl vs. glibc- and init-based systems for example) that can impact direct compatibility, but they're very minor.