It really is that simple.
Forcing something on people from a position of power is never in their favor.
As a user of Reddit, I think it’s cool, and also raises some concerns.
I think most sites that handle user data are going to have rough edges. Making money off of user content is never without issues.
The nature of network effects is such that once a site gets as big as reddit (or facebook or tiktok or whichever), it's nearly impossible for competition to take over in the same design space.
Many communities (both small and large) are only present on specific platforms (sometimes only one) and if you want to participate you have to accept their terms or exclude yourself socially.
Most communities on Reddit that I’d care to be a part of have additional places to gather, but I do take your point that there are few good alternatives to r/jailbreak, for example.
The host always sets its own rules. How else could anything actually get done? The coordination problem is hard enough as it is. It’s a wonder that social media exists at all.
Gatekeepers will always exist adjacent to the point of entry, otherwise every site turns extremist and becomes overrun with scammers and spammers.