My understanding is that the PSL is good-enough and avoids somewhat costly/unreliable TXT lookups for every domain when only a very tiny fraction of domains would actually want this treatment.

There is also a bit of security risk since browsers use this list to set cookie restrictions. If it were in DNS, which the vast majority of people use unencrypted, an adversary could manipulate responses to either (a) drop the TXT record altogether so the domain is not restricted or (b) craft a response in which the domain disables the behavior.

The public suffix list servers the purpose to only separate (sub)domains that are reasonably expected to be controlled by different owners.

Many systems - ex: rate limits, malware domain lists - would be very easily and cheaply gambled if domain owners could "disown" subdomains at-will, just with a change in DNS. There's a fairly long review process to get onto the public suffix list for exactly this reason.

There's also the historical aspect, that DNS is a much older technology than the need for the public suffix list. Mozilla at the time couldn't expect that all registries would adopt a new standard quickly or at all. Since there was a need for this information for browser security improvements, the list was born, and gradually become the de-facto standard source of such information.