So yes, I agree it's likely not primarily ignorance driving this.
In particular, my guess is that they looked at their estimates for how much they could make off recurring revenue sources in desktop OSes, and their estimates for how the desktop market is changing with more younger users not using them or viewing them as legacy platforms, and decided they should pivot to primarily being a services provider, in much the same way they're aggressively trying to slap the Xbox branding on other things and getting out of the console market as fast as they can run.
Could be wrong, I don't work there, but usually my experience with companies that large making apparent missteps is that their goal isn't the one you think it is, and attempting to extract as much data as they can from desktop users really sounds like what you do when you're trying to squeeze the sponge before you throw it out.
I would assume after 11 LTSC finally EOLs might be the earliest they'd be considering anything more drastic, but I wouldn't speculate whether it'd look like a good idea by then.
It may sound wild, and certainly possible time will prove me wrong, I'm not an oracle, but the ongoing failures in basic functions in Windows seems like they're removing significant investment in it as a reliable platform for general use going forward, and their recent introduction of things like the Xbox handheld running Windows makes me suspect their goal is to constrain where it's still used, and trim how much it costs to maintain that way.