Why exactly is it insane ? To reliably differentiate (let's assume it's possible for the sake of argument) between "you made this" and "you didn't make this" or at least "a human made this" seems to carry mostly (if not only) benefits.
They also said many other things that never happened. And they never showed it. I bet $100 they do not have a semi-resilient method with 99.9% accuracy, especially with all the evolving issues around "human vs computer" made content.
I bet you also the `semi-` in the beginning leaves a lot of room for interpretation and they are not releasing this for more reasons than "our model is too good".
If it's not possible to watermark, then just ban LLMs.
Tech people have this weird self-serving assumption that the tech must be developed and must used, and if it causes harms that can't be mitigated then we must accept the harm and live with it. It's really an anti-humanist, tech-first POV.