Or, they correctly understand exactly how the license works and intentionally choose something that's effectively impossible to use in anything proprietary (for some definition of "use in" that's probably less severe than you're implying, though IANAL).
> Either let the code be free or keep it proprietary rather than waffle or force unreasonable BS on users.
Correct; AGPL is 100% Free and a commendable choice. (Not that there's anything wrong with permissive licenses, but copyleft is also good.)
The result is that a lot of developers have had to sign contracts with their employers that say they'll never use or contribute to AGPL code even in their personal time. This is often reinforced by mandatory compliance training that repeats bogus nonsense about how if you ever run an AGPL program on your personal laptop you could turn the entire company codebase into GPL code. These myths then proliferate and end up driving other companies to do the same thing. It's all FUD of course, whether the people repeating it know that or not, but the practical consequences are that a lot of people legally cannot interact with AGPL projects at all. Again, that's not because the license is all that restrictive but because of what amounts to a universal corporate boycott.
What percentage of companies do you think impose these kinds of restrictions? From what I've seen, lots of small/medium tech places barely care about software licenses at all.