I'm surprised no one here mentioned backwards compatibility as the likely ultimate reason Microsoft hasn't fixed this by default yet. As others have mentioned,

I'm surprised no one here mentioned backwards compatibility as the likely ultimate reason Microsoft hasn't fixed this by default yet. As others have mentioned, the "fix" of turning off auto-formatting is already available. But many here are wondering my Microsoft hasn't fixed the default. I assume it's for the same reason Microsoft Excel purposely claims the date 1900-02-29 is valid, to be compatible with Lotus-1-2-3. I assume many legacy spreadsheets would break unpredictably if interpreting values as dates by default changed.