I'm sure this won't be a popular opinion, but it's generally a lack of: ability/skill/knowledge/experience/priorities.
Making a compact sheath is harder than making a two piece pancake with rivets on both sides. Even more difficult when doing it as a taco sheath, and very few makers actually know how to get the fold of the kydex to follow the spine of the knife. A compact taco style sheath is plenty robust to stand up to daily carry and use.
Many makers make a sheath to have as many attachments positions as possible, instead of tailoring the sheath to the user's intended role/carry.
Not everyone has the experience to know what truly makes a great sheath; whether it's not having handled great sheaths to have a true metric of comparison, or not carrying a fixed blade daily, or not doing so in a concealable manner.
And probably the biggest reason; most sheaths are made by knifemakers. Just because someone is great at making knives, does not mean they are great at making sheaths. Many knifemakers enjoy making knives, but do not enjoy making sheaths. As such, the sheath is an afterthought instead of being carefully designed and built to work with the knife as a system.