> Typesetting is a big item

I'm calling bullshit. Look at how annoying the template requirements are for authors: https://www.acm.org/publications/authors/submissions, and note the stuff around Word files. Other journals can be much worse.

If any serious typesetting were being done by these journals, simple plaintext, Markdown (or RMarkdown) or minimal basic LaTeX, with, admittedly, figures generated to spec, would be more than enough for typesetters to manage. In fact, if you were doing serious typesetting, you wouldn't want your users doing a bunch of formatting and layout themselves, and would demand more minimal representations of the content only. Instead you have these ridiculous templates. I am not convinced AT ALL.

Do authors submitting to literary agents have to follow such absurd rules? I think not. Can modern blogging tools create beautiful sites with simple Markdown and images? Yes. So why do academic publishers demand so much from authors? IMO because they are barely doing anything at all re: typesetting and formatting and the like.

To understand the academic publishing process better, it's a good idea to look at the four main groups of people involved in the process: authors, editors, reviewers, and publishers.

The authors write up their research results.

The editors organize the review process together with the reviewers and the publishing process together with the publisher.

The reviewers read the papers and write their reviews.

The publishers publish the papers.

Stylesheets are typically provided by the publishers and passed on to the authors early on. The reason is two-fold: for one, the publisher wants to produce a high-quality product and uniformity of layouts and styles is an important factor. But the second reason has to do with everything that happens before the publishers even comes into play: common style-sheets also provide some level of fairness because they make the papers by different authors comparable to some degree, e.g., via the max length of a paper.

On top of that, authors often want to present their research in a specific way, and often have strong opinions about e.g. how their formulas are typeset, what aligns with what else, etc. and typically spend quite a bit of time tweaking their documents to look the way they want it. That is, the authors already have an interest in using something more powerful than Markdown.

But like I wrote in another comment here, in doing so, authors do not always adhere to the style guides provided by the publisher - not necessarily maliciously, but the result is the same. For instance, authors might simply be used to handling whitespace a certain way - because that's how they always do it. But if that clashes with the publisher's guidelines, it's one of the things the publisher has to correct in typesetting.

So, perhaps that's the confusion here also to some degree: the typesetting done by a publisher is in the majority of the cases on a very fine-grained level. A lot of is is simply enforcing the rules that were missed by the authors (with the goal of fairness, comparability, and conformity) and small perfectionist's edits that you might not even notice at a casual glance but that typesetters are trained to spot.