A real tech fatigue seems to be setting in with lots of people and the last thing many of us want (including many here) is more tech in their lives. I think it's especially true of tech that isolates you like AR and VR does.
Most importantly it needs to be packaged in a way that you don’t need to be a motivated techie to pick apart the offerings, understand specs, setup a bespoke system, and just generally try so hard to get onboard.
I’m not sure about the thesis that people want less tech in their lives. Look at the widespread adoption of “smart speakers” which to me seems like the ultimate expression of superfluous technology.
As a technology person, I tend to agree with you that these devices fall short of real life changing functionality, yet obviously many people out there love it.
I think smart speakers aren't fatiguing because they are so passive. They sit idle, doing nothing until you call for them. Then they respond and return to idle. If using an Apple HomePod required special headphones, it wouldn't have sold at all.
That said, I think there's a decent market for AR/VR devices but I don't think it's gigantic. It might be Playstation big (10^8), but probably not iPhone big (10^9).