As someone new to Linux, I'm curious about this as well.
As a comparison, take Android. Thinking broadly about fragmentation, Android is fragmented because of so many different hardware vendors who use Android on their phones. They make hardware and have an incentive to customize Android to work on their phone because it's free and helps them sell phones. But the vendors don't try to call it anything but Android usually (not sure).
But this isn't the case for Linux. Basically zero vendors are Linux first, only a small number like System76 or Purism. So where's the incentive to create all these distros?
I can only conclude that the incentive to create more distros is created by builders. It's not companies (as in Android's case), and it's not users as users have better things to do. It's a bit odd to me.
PopOS by System76 perhaps is similar to Android then. System76 wants to differentiate. I have read their guide to how it's different than stock Ubuntu [1] But why not call it "Ubuntu - customized for System76" version or something. But look, I'm a huge fan of System76 so if they say it's needed, I trust them. And sure, the tweaks they've added seem fine (disk encryption on install, power profiler)...but making it distinct from Ubuntu to me is a negative. I trust Ubuntu, why sell me something else? I added mouse drivers and custom keyboard commands to PopOS - is it now iStingray OS?
Disclosure: I'm new to Linux, switched 2 weeks ago due to Apple's surveillance. Am on a System76 laptop running PopOS. I support System76 and donated to PopOS directly.
[1] https://support.system76.com/articles/difference-between-pop...