Because it keeps it in the news / relevant. This way, people actually still talk about the app, which introduces it to new people who were unaware that it even exists
Oh yes, absolutely, it's just obnoxious how sparse the selection is. It'd be much more understandable if they at least had their "greatest hits" in there to start and slowly start adding more niche things, but they just straight up don't have most classics in there. Nintendo makes dumb decisions.
The end goal is the same for them. If more people use it when it's fuller than using it now then the app has grown. It's not like they will drop music they own 100%.
At least they're adding new stuff but I'm still waiting for them to add the Xenoblade Chronicles OSTs. I mean the Xenoblade X remake is coming, if there's a time to add Xenoblade music it's now.
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It is annoying, but it works.