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Because it is patenting math. Which is a law of nature, which gets discovered. And the patent statute says that laws of nature (such as E=MC^2) can't be patented.

He is patenting logical gate scheme that can produce average of two int in a single instruction. You can average two ints any way you want and not owe royalties ...

> Am I missing something?

Yes, you're missing the fact that it's trivial and demonstrates virtually no creativity.

Almost certainly invalid today (as to all claims). Even before recent decisions, the method claims in particular were pretty much rejected as a matter of course (see e.g., https://scholar.google.com/scholar_case?case=143311033686351...) (specifically the claim appendix at the bottom)

Patent US6007232 – Calculating the average of two integer numbers