That is of course not totally true, the copies are in private digital stores.
But for general public the knowledge is gone. Someone researching let’s say the history of a little village won’t be able to catch it.
This happens as well in current private collections. The physical book gets stored in a private book collection. But many also get out by the years when people are moving or die.
The amount of companies doing this is the real harm. There will be many companies running this process. It is absolutely not comparable to a single book collection getting burned in a house fire or being thrown away instead of donated to a second hand store.
It might feel for some as a not really big issue but actually it is in time.