It is first and foremost a cost saving measure for the company as it is a simple policy to create and enforce, in my experience, and it avoids payouts for accrued PTO when terminating employees in some cases.
There are no federal or state laws mandating paid vacations or holidays. That's entirely at the discretion of the company.
There is no federal paid sick leave mandate. Some states have them.
We have a federal right to 12 weeks of unpaid leave for qualified medical and family situations under a law called FMLA, the Family and Medical Leave Act. Even that has limitations - small businesses, highly compensated employees, and new employees are carved out.
When you are hired, all of these are defined by the companies policies or what you can negotiate. If you have paid vacation time that accrues it'll be paid out if you quit; most companies don't like that, so they give you "unlimited time" on the approval of management. But because we have no statutory protection, your unlimited time could legally be "zero hours".
Or, you get states like here in Texas, where the state senate just passed a bill making it impossible for cities like Austin to require companies provide sick leave.
Where I am in Canada (and I imagine many states) there are legal minimum requirements so I officially get "3 weeks" vacation, but take a couple weeks on top of that using the "unlimited" policy. So "unused" vacation would be paid out according to the official 3 weeks policy in my case. I could see something similar being possible in Europe, but I think in practice europeans already take more paid time off than most North American's with unlimited vacation.
Years ago, the company I work for switched from accrued to unlimited PTO at the end of the fiscal year in order to make the books look better. When it was announced, they basically told everyone to take the remainder of the month off. The fiscal year happened to be the same as the calendar year, so most people were taking huge chunks of time off due to the holidays anyway and didn't really care. For those who had more PTO than what was left, they were told to work with their managers to arrange for as much time off as they felt was necessary in compensation.
This only worked because it was a one-time deal and the managers were (and mostly still are) very reasonable and supportive people. A while later we were merged with another company and they switched us back to regular PTO to be in line with their own HT policies.
It's also why many companies hate carrying vacation days over - they don't want someone to save up three months of vacation that they earned at a low wage from getting promoted, and then receiving it in cash when they quit at a higher wage.
Given the choice, an employer will always prefer to keep payroll costs predictable.
This can be a nasty carrying cost for companies.
I worked at a place that went from the standard accrual of vacation to "a minimum of 20 days/year, no carry-over."
To keep employees from engaging in open rebellion, they had to offer two tiers: either 1) you agreed to the new plan and gave your accrued time back, or 2) you keep your accrued time to date, received no more, and could join the new plan only when your vacation time balance hit zero.
The new employees, including me, quickly picked option one. The long-timers all picked option two, sat on their time, and cashed out when they went to other jobs.
Earned vacation time is earned - companies trying to reclaim it are acting dishonestly and need to be avoided at all costs.
As for how it gets used, apparently it's very bimodal and "everyone" is either a "keeper" or "flirts with having none".
Personally I don't have a problem with "unlimited PTO" but (big but) there really does need to be a culture of people taking a reasonable amount which I would define as a month or so.
Which is why unlimited was born, because now you never "earn" any so you never "lose" any, and thus can never accrue any either
See the government saw employers with "use it or lose it" policy as "screwing over" the employee, so they ban it believing all companies would just accept they would have to allow accrual of PTO / Vacation time
Reality is that is not tenable for most companies and many people (like me) would just rack up years of time because we never take any off (when Possible I just cash out any PTO / Vacation I get, but many company stopped doing that as well)
So in response to the government banning employee lost their access to guaranteed number of days, instead how have this "unlimited" which is also an impossibility.
IMO "unlimited" is many many times worse than use it or lose it with a guaranteed number of days every year