There are notorious "Instagram parents" who post their kids doing embarrasing things and getting pranked. When the kids grow up, what if they don't like those pictures and the attention it gives them?
Even if you're not one of those parents, and have perfectly good intentions, you never know what goes viral. Maybe the picture of your kid gets used as a stock photo by some shady company, it gets millions of views, and now random other kids and adults are harassing them.
That being said, the blanket policy "no pictures, ever" is still ridiculous. They should at least mandate that no pictures should be posted publicly online (which may actually be legally mandated in some places). And even then, the days of viral videos like "charlie bit my finger" are over, the odds of your kid's photo posted in some random facebook group actually becoming viral are exceedingly small.