the keyboard is of a known layout, and by marking by feel when you move from one key to the next you know where you are.
This allows the keyboard to be operated without looking, much like how most people use a ordinary keyboard today once they are past the hunt-and-peck stage.
A big reason for touch screens being a problem in many situations is that you have to actually look at it to operate it. Physical buttons, switches and knobs can be operated by touch alone.
Frankly way too much of modern computing relies on sight and sight alone.
Also, allowing someone to rest on the keyboard is why long typing sessions are not such a strain on the hands. Without it, the writs has to carry the weight of the fingers continually.
Also this "vibration" thing you're talking about--it's obvious you haven't thought deeply about this because if you took at least a couple of hours thinking more about how this would work you would realize vibration itself has nothing to do with this". I have had a phone that gave you nice tactile feedback using vibration (Prada phone), and while it does feel nice, it doesn't do anything in terms of letting me know my input was correct.
Anyway this all doesn't mean anything if you don't really believe me. So let me ask you a rhetorical question: Do you think you will be able to type into a blackberry absolutely without looking at the keyboard? Also, when exactly would you be typing while NOT looking at a mobile screen? Even on a blackberry people have to look at the screen to make sure they didn't mistype something (Even with all that tactile feedback). On a desktop computer typing without looking makes sense because that's the mode in which people use the device (whereas on a mobile phone the screen and the keyboard are attached so looking at the screen means also looking at the keyboard)
Anyway if you really believe in these ideas, you should at least try an MVP or any simple experiment (or maybe even some thought experiment) before being so sure about it.
Combine with pressure detection and you can make Swype / SwiftKey provide a sense of where you're dragging your finger when swipe typing, plus that you can put emphasis on the right letters easily when swiping across groups of letters that would make for different words, making for better precision in the word suggestions.
It would also be much easier to implement gesture support by having areas much easier to target that you start gestures from or end them in. You'd also instantly get tactile feedback telling you if you made the gesture right or not, like for switching character sets or for moving the cursor.
Lots of gestures could be supported, where you'd essentially be "asked" with tactile feedback to push harder after making the gesture to activate the particular action. Suddenly you solved both accessibility, discoverability and precision, while reducing the error rate.
As I mentioned above, I explored into building a mobile device that you can type into without looking, and my first hypothesis was "tactile feedback is key". And turns out there are many many other factors at play. Even if Apple built something like you say, that won't make more people buy iPhones, it's just an incremental innovation that doesn't significantly change any user behavior for the better.
I'll have to think a bit longer to come up with good examples.
Edit: non-scrolling swipe gestures are where this is the most valuable.
Improved Google Photos app image selection: a hard press would start selection, and as you continously to drag to select it would provide tactile feedback for where the image borders are, making accidental selection less likely and quicker to detect. Selection would stop on release (to make scrolling easy). Hard press and swipe again to continue the selection.
A surface that can "project" arbitary tactile shapes with different strengths of feedback can let you orientate without looking. In fact it can even do Braille for the blind if the resolution was high enough!
The touch screen keyboards are more practical in many ways but they can never truly replicate a physical keyboard.
(I long ago traded the fidelity of the actual keyboard for the convenience of a touch keyboard.)
'Most people'? I must have had really bad luck in a number of financial/tech companies, as a disturbing majority don't touch type.
Note, my experience is with people aged 30-50. It's possible that this doesn't apply to millennials, but they certainly aren't the majority still.