I think it is for the same reason that many STEM programs require their undergraduate students to "apply for entry" to the STEM part of the program.

For example, at $GenericUniversity all CS students are listed as pre-engineering until completing calculus, data structures, discrete math, and a few introduction to programming courses. The school then "weeds" out students by making the initial coursework high-paced and somewhat difficult. After each round of courses a few "weaker" students drop out of the program.

Eventually, the students that make it through the pre-engineering curriculum apply for the engineering school and are admitted, assuming they have the right grades. The school now hopes that the students who have made it this far will be be the "better" students and thus will get better grades and be more likely to graduate. By weeding out the "weak" students before the students are in the Engineering School, the school can report a higher graduation rate and overall GPA for students in the program. Though everyone knows that many engineering students failed (or were failed by) the program, it doesn't go into the School of Engineering's reported stats.

I don't have any sources on this, but I do have numerous friends who work for universities and have heard this same story in varying capacities over the years.

Teaching students and teaching in general is time not spent writing that paper that gets you your PhD / postdoc job / tenure. Eliminate as early as possible to make sure 1) the load from incompetent students does not potentiate and 2) to spend more time with & recognize the ambitious students that you can recruit for free work on your PhD / postdoc / tenure paper or as TAs if your department is rich.

Also, in Germany, university is free and publicly funded. There is only a small incentive for universities to pass as many students as possible and almost none for the immediate professors and doctoral candidates that do the teaching. Alongside with the public funding comes the implicit understanding that not everyone, for whatever reason, is meant for a college degree and so 40-50% of certainly engineering related students will drop out. No biggie, you are not 150k in debt, just do an apprenticeship.

Colleges have become a confidence game where people exchange money for membership in an exclusive club. That's not say colleges SHOULD be this way, but the reality differs from the old rhetoric.

As Peter Thiel often says, why aren't all classes at Ivy League schools simulcast on YouTube if they're so great? We have the technology, it would be a boon to all humankind. But they make money off their exclusivity. (If the teacher contact compels you, why not at least make the lectures available to all and people can pay for the tutoring, you can probably keep enrollment up that way).