At the time, I remember someone claimed that the reason was that they were afraid people could leave it plugged in for convenience. Apple thought that would lead to a worse experience because their mouse was designed to be used wirelessly. I think it was actually more related to aesthetic "icks" by the designers, because people would have disconnected the cable if it was in the way.
The original USB mouse (for the first iMac) was round, so you couldn't orient it in your hand without looking at it constantly.
And it came with a very short cord (because there was a port on the right side of the keyboard to plug it into). But then the laptops got updated with USB ports and they were only on the LEFT side of the case.
For at least a year or two you could not buy an Apple mouse for your Apple PowerBook and use it in your right hand, because the cord was too short to go around the case.
Eventually they shipped a "Pro" mouse with revolutionary elongated shape and longer cord. (...and optical tracking, and what looked like zero buttons, which were pretty neat)
A lot of people really will just anxiously leave the cable in the whole time if given the opportunity. I have a wired/wireless Logitech mouse and I confess that I hardly ever remove the cable. Between this, and the space and connector issues of adding a "normal" cable connection as referred to in the grandparent, we have two reasons to think that Apple's decision wasn't all that clearly bad, let alone one of their worst.
It's still one of the worst ideas. Insult to injury.
There are plenty of contenders for 'worst ideas they ever had' and this just isn't up there.
That's a quote from Steve Jobs about how basically all of their competition (except Google) had made the mistake of trying to ship desktop software on phones. The problem with the stylus is that it's a hardware workaround for a software problem: the sort of cost-reduced engineering you get when a company wants to "have a mobile strategy" without actually putting in the time and effort to make something good.
The Magic Mouse is the exact same kind of "we couldn't care less" cost-reduction. The charging port is on the bottom because that's the only place you can put a charging port with the existing all-glass design. Because they re-used an existing design intended for removable batteries. This is such an uncharacteristically un-Apple move, and one so obviously detrimental to the design of the device, that people (including myself) actually psyopped themselves into thinking Apple had deliberately designed the mouse to enforce wireless usage.
And, to be clear, Apple has never done that.
All their other peripherals with rechargeable batteries in them will let you use them fully wired if you plug them in. In fact, if you somehow engineered a way to move the charging port somewhere less stupid, the Magic Mouse probably would work plugged-in, too.
If you see a charging port on the bottom, they blew it.
If this were a £10 mouse then this excuse might be valid, but it isn't.