Now, given the context this may or may not be a distinction that you care about, but there certainly are times where you really do care.
(Besides, if I'm running a tcpdump on a box to try and figure out why the network is going wibbly I'm a lot happier knowing all traffic is encrypted and I'm not going to accidentally capture some PII. I've had to tcpdump within docker containers before too, so putting everything in containers doesn't necessarily solve this.)
One reason off the top of my head would be regulatory/compliance issues around how things are encrypted. wireguard is relatively new, and some certifications required to do business in specific industries (finance, healthcare, etc) mandate protocols with a minimum level of maturity. wireguard may be good, but many regulators would probably not find it acceptable without a longer track record.
On a more concrete note, I'd consider any system that handles authentication to be inherently broken if it had no way to keep those credentials safe out of the box. TLS has long been a cheap-ish way to do this, as it's widely available and well understood by both implements and regulators.
If your devices are already on the same network and instead you close down the firewall and you move everything into wireguard you've just moved your problem.
It's possible it may dethrone TLS in the future
I don't use haproxy to secure my telnet sessions - I use ssh.