Why? Companies need to geo restrict apps for various legal reasons so Apple gave them a method to do so.
Apple should not be the arbiter of whether a business model you want to engage in is legal or not. That's what courts of law are for. I would strongly oppose Apple unilaterally deciding which apps can-, and which cannot-, use the geofencing feature.
Go to the government, and have the government compel Apple to restrict certain apps if that is your desire, but for them to do that on their own is completely out of line.
This is exactly the argument against what Apple is doing. They're compelling the user's device to enforce geo-restrictions against the user's wishes. They're acting as a government when there is no law requiring the user to respect arbitrary -- and inaccurate -- geofencing restrictions.
The DEVELOPERS are compelling the user. Which is what should happen. The user should be given options by the developers, not Apple.
Our computers are meant to empower us, not to enforce idiotic developer policies that nobody cares about.
As opposed to all the other Apple decisions?
By the way, which law requires Apple to provide geofencing to a health insurance app such it can't even be installed outside a particular country, and ties its hands completely on the matter?