Case study: Facebook. Hates Apple for the App Tracking Transparency prompt. Hates that they get substantially less revenue from iPhone users, according to leaked slides, due to restrictions on what APIs they can use to fingerprint and track users. Hates having a Privacy Label in the App Store. Solution? Force users to sideload. They'll most likely do it because they want Facebook, Facebook doesn't need to follow Apple's rules anymore, problem solved.
In that case, it is less that Apple is afraid of giving users the choice, as much as that large apps that people use will force users to make the choice for them.
And for that reason, while some users would legitimately want their iPhones to be able to install apps from anywhere, most users hitting the "Allow Sideloading" button would have essentially been forced into doing so, without actually wanting it.