Those are issues for a subset of computer hardware. Embedded computing is still huge and has drastically different performance requirements. TAOCP is designed to stand the test of time, not focus on micro-optimizations that generally have limited performance impact and are a waste of time 99% of the time.
Hmmm. My edition of "Sorting and Searching" has a section devoted to tape-sorting.
The point isn't learning the answer; it's learning how to get to the answer.
Even chips as small Cortex-M4 has a write buffer, 3-stage pipeline and branch speculation. And real embedded computing is more and more utilizing hardware similar to desktop/mobile/server. You can't run self-driving car / neural networks / image processing on a single threaded CPU with no cache or branch prediction.
As to the rest of it. It's much cheaper to use a GPU style massive array of dumb cores vs. a few faster cores. Don't forget car companies are spending billions on these chips so spending a little more on software to save a lot on hardware is a good tradeoff.