In my experience, only the top 5% or so of engineers actually get to decide what to work on. Everyone else just has to churn through the backlog.

That is about right. The backlog is what makes money in general.

You want the top 5% not working on the backlog because that means if something urgent comes up you don't feel bad about asking them to switch tasks. If a junior needs help they are not interupting anything imbortant to ask. and it means you are making the 5-10% your leads and thus growing them into future top 5%.

that the top 5% often discover things that make money you didn't expect is a bonus.

Even the top engineers don’t have total freedom to choose what they work on. The work has to contribute to the business. I’ve seen valued engineers go off on tangents that don’t produce anything useful, which after time gets noticed and they are no longer considered one of the top engineers at the company. Worst case, the company needs to do layoffs and they look at what everyone has been contributing. They realize the engineer off working on their own thing could be removed without impacting operations at all, and that they have become detached from core business operations. So they are laid off and, honestly, nothing changes.

Everyone has to work on things that are in the company’s backlog of needs. The more status you have, the earlier you can be involved in shaping that backlog. But the backlog always comes down to what the business needs.