The relationship between employer and employee is simple. Employer pays money for some value the employee offers.
Negotiation is clearly in play before the arrangement starts, willing buyer and willing seller and so on.
After the "sale" the employer has most of the power, but the employee has a nuke - they can quit. Usually the employer doesn't want them to quit, so will make unilateral changes to the contract in the employ yes favor from time to time (ie raises etc).
Unfortunately if you are below a certain age, or of a specific skill set, the employer expects you to trigger the nuke anyway, and nothing they do can prevent that, so frankly they don't spend too much energy or money trying to make you stay.
While employees can negotiate after employment has started, they don't have much leverage other than "or I'll leave". And one can only play that card so many times before it's easier just to let you leave.
Employers have legitimate reasons for wanting non-remote workers, but those reasons don't matter to employees. Indeed most employees can't even imagine what those reasons are, or simply discount them as being meaningless. That's OK, there's a reason they are employees and not running businesses.
So to answer your question, employers decide WFH because they have all the power. They figure the upside is worth changing staff over - some will leave, for sure, but there are others out there waiting to fill that slot.
Of course other companies have different priorities and goals and are happy to employ WFH employees, so there's a home for folk who prefer that as well.
Or, if you want the autonomy, and power, (and risk) that being the employer brings you, then by all means start your own business and build a company and culture you'd like to work at.