Simulink / Stateflow and more generally 'synchronous programming languages' have a rich academic lineage and are particularly well adapted to safety-critical tasks.

These languages bring a lot of key guarantees that you can't (easily) get from more classical languages like bounded memory usage, hard real time guarantees, numerical properties, ability to prove theoretical properties about the model etc...

It's also not like having your code written as a text file would save you from using closed source proprietary compilers or languages (Ada, Ferrocene, various C distributions) for safety-critical software.

Rather than "instead" it can be both. I don't want mechanical engineers hand writing observer models and PIDs in bare metal C, but I also don't want software engineerings designing my observer models and PIDs. They are different tools for different jobs.