People can run their own projects how they want. But this is not just a question of preference -- an open source project developed this way is strictly less use

People can run their own projects how they want. But this is not just a question of preference -- an open source project developed this way is strictly less useful than one that exposes its true fine-grained history. They quite literally throw away (or keep locked up, which is the same for us non-insiders) information that is relevant to understanding and debugging the project. The only reason for that is misplaced vanity. Note that nobody is asking to see your code before you're ready. You still get to choose when to push that fancy new release to the public repository. And nobody is asking you for write access.