Because in my experience, the value of collaboration tools isn't versioning -- going back to an older version rarely happens.

It's the suggested edits combined with comments sidebar right there in the document, where you can have whole back-and-forth asynchronous discussions.

There's no obvious/easy way to have comment threads in markdown or in git.

And while you could, in theory, implement suggested edits as commits on a separate branch waiting to be merged in, the workflow for that would be pretty horrible -- are you going to create a separate branch and commit for every single edit? Since small edits are generally individually accepted, rejected, or further modified.

Because not everyone is interested in setting up a Pandoc/Latex toolchain. Overleaf almost solved this problem but they don't support Pandoc as a frontend and want money unless you self-host.

You don't need pandoc and even less a latex(WTF does it have to do with md???) toolchain to work with markdown documents.

Sorry, I was talking about scientific writing, where you have to be able to produce PDF artefacts.

Writing in markdown and converting to .tex is actually a quite popular way of doing that these days.