I kinda get it, but what is the practical difference between that and re-renting the game 17 years later? In both scenarios you depend on the game still being available. (the buy model make it easier to keep the game around on some disk for 17 years ofc.)

Because it goes from a hope to a rule. No need to hope that Diablo IV will be free on Gamepass, day 1 (and let's be serious, if ActiBlizz stays independent there is no hope in hell for this to happen) - but if the sale goes through then this will be reality.

Imagine Diablo IV or each of the Call of Duties... free... day 1. That is huge value. Something Steam can't compete with.

Accounting and exclusivity. MS can try to make GamePass a gate for all future purchases, and the interchange cost is just moving money around inside MS at that point.