Also, companies measure their advertising success in their conversion rate and A/B test vs broad based ads that target more widely. They have the opportunity to advertise super broadly if they so choose, and can measure that impact.
By narrowing the targeting, advertisers can advertise to "just" the people who are over a certain level of confidence interval, and not advertise to the people who don't give a damn.
Ad targeting is actually an exclusion business, it's about companies wanting to rule out as many people as possible, reducing their ad spend, who are then picked up by others.
Companies just don't want to buy junk ad slots. There are actually not all that many ad slots and the cost can get moderately steep for broad base, low conversion ads.