Governments only serve the people they know about. The standard of service for these people increases substantially when they're no longer invisible. They get a ration shop, voter booths, that sort of thing.
Indonesia in particular is a HUGE nation and makes Mexico look wealthy. Over 270 mil people, on thousands of islands, stretching across thousands of miles. Personally, I'm amazed it's been able to hold itself together over the decades.
What has held Indonesia together is the overwhelming dominance of the Javanese, through a combination of (comparative) economic might, weight of numbers, repression and neglect of the rest.
https://en.wikipedia.org/wiki/Koteka
TL;DR: The government objected to Papuan tribesmen wearing only penis gourds and airdropped a bunch of pants for them, with predictable results.
The increased responsibilities are:
* They're tied to the national ID which has biometrics and all that shite
* If they make more than the exemption (which can happen occasionally) they have to file now. In practice, they'll just dodge it since they work 'informally' (i.e. the guy who goes out fishing and then has his wife sell at the local market isn't having income deducted by an 'employer')
* I don't recall particularly, but I think they also stick you with a religion and an ethnicity field (for affirmative action stuff). Not sure about this so check. This one makes me nervous if it's real.
But it's just so much more beneficial to be known to exist. If the government simply doesn't know, it won't particularly look. Some bureaucrat in the big city will look at the blank spot and put a desal plant there and then they'll come evict you.
At least if you are known to exist, you can fight the eviction temporarily or get some money.
Westerners think the Chinese murdered female babies, but I remember reading (citation needed?) that the female babies mostly end up being undocumented.
I think the disappearance (and formalization) of home births started the movement in the other direction, along with Social Security cards inevitably being used as identification numbers. Anti-immigration drives during the Clinton administration and after 9/11 (both resulting in the RealID push) were the nails in the coffin.
edit: my grandmother didn't even know her birth name until she was middle-aged. She just got ID with the name she had always gone by, because birth documentation wasn't required.
Military conscription is a huge impetus for population registration and tracking. In the U.S. there hasn't been conscription since before I was born, but there's still an agency that notionally registers military-aged men and their whereabouts, with intermittent halfheartedness and minimal enforcement. (My recollection is that all of the enforcement actions for the past few decades have been against men who wrote open letters refusing to register, or something, as opposed to those who simply forgot or declined to register.)
James Scott has written extensively about how many people in history didn't want to be tracked by (or "legible" to) the state, because this would subject them to conscription and taxation. The idea that conscription or taxation are good and that you should want to be subject to them (either because of a theory of political legitimacy or because of benefits that they will personally bring you or your neighbors) is kind of a historical anomaly, although very widespread today.
I do think the idea that you would be better off if you and the state didn't interact than if you did feels most plausible in a rural farming environment, and least plausible in a city in an industrialized society -- not that many people still don't wish to be, or think about being, free of the state, but that it's obviously taken up such an enormous role in life that it feels like a huge sacrifice to be totally invisible to it. A big trend over time all around the world, especially following the industrial revolution, has been higher taxes and more government services. Even if you don't personally feel this was a good trade-off, a whole lot of parts of life would "break" for you if you were outside of it.
Western countries are unbelievably wealthy and they have crazy effective information infrastructure. I suspect this is not common across the globe. Many people may barely have a birth certificate.
In many of these countries, the infrastructure is like the UK pre-Domesday-Book. There may be people living in a village that is unmarked on the maps.
For the people my friends last worked with, they were in a fishing shanty town in the Indian state of Karnataka that was unnamed (officially) until recently. Strange, eh? People just agglomerate somewhere without incorporating a municipality or anything because they have to survive.