i think its good in the age of people needing a name to tag their music, like it helps small artists get seen maybe. but yeah its not super crucial or anything. i think the philosophy that every band is their own genre/ every song is its own genre is sort of true and kind of speaks for itself, but overall i think distinctions of historical movements like.... jazz vs funk vs blues vs hip hop are pretty clear distinctions and make sense and arent confusing.
i also think its like coming up with ideas for band names so theres a temptation to just have fun with it but its not really so important. like, is this really space age lofi tiger crunk gabber trip glitch or does that just sound dope as fuck? lol.
i also think in a modern age where a lot of people are making shit at home with computers it is normal to think we are all making some form of electronic lofi/bedroom folk music, which I think in a way is sort of almost an accurate generalization about anyone who picked up a tascam since 1979
I think some people will also say that despite the directly modern age, people who were making distinctions between like, different techno in the 90s would say, yes, these are all distinct genres, and some people would disagree, but there is truth that the average person would think ehh its all just techno right? but people deeper in the scene would know trance is like basically totally different from happy hardcore or original hi-NRG records or something.
I guess there is also the aspect that there's lots of genre bending stuff nowadays. like you said, i dont think its necessary but, i think it serves some people. if they genuinely have a blend of some specific subgenres and tagging it as that help them reach their audience, thats pretty awesome