The other is just to make work more fun. Beyond 3-4 people, everyone stays muted, and with no cameras, a lot of the jokes and banter just stops. Dead air is a soul-draining response to jokes (whether good or not) that an individual can only try so many times. This works well during scrum meetings (when it's just the small team anyway).
I say this as very much an introvert: meetings are tiring for me anyway; I'd rather they're not also boring.
That policy has kind of stuck around with our team, and now people rarely turn on their cameras during team meetings. I would prefer to see peoples’ faces, but it seems I'm in the minority, and I’ve given up on trying to advocate for it.
I can also understand how Windows and Mac users might be hesitant to put their full trust in the technology, as it does occasionally glitch and blur out more or less than it should. Virtual Backgrounds also don't really help with poor lighting, or pandemic induced weight gain, etc.
So would say it's not that they didn't understand how virtual backgrounds work - just they were aware of their limitations and decided to err on the side of being lenient toward employees during a stressful period in a lot of peoples' lives.
In my current role all 1:1s, all meetings with clients, and all internal demos are cameras on by policy. I have friends that work places where the rule is camera on all the time unless it's a larger meeting or there's a presentation or something.