Touring makes almost no money. Only concerts with >1000ppl make money. Below that you can assume not even the sound engineer gets paid.

Not true at all. I support small artists and it's the only way they make money. Ticket sales and merch make up the vast majority of artist revenue for artists who arent in the top 1%. Most musicians don't make money if they aren't touring or selling merch somehow.

there's also the invaluable aspect of networking that touring allows. bit of a tangent, but it's very important for musicians to network.

The exception are musicians who do production stuff. Think movie/tv scores, commercials, etc. I actually know a handful of artists who used to tour quite a lot but eventually settled down to do production stuff. So they transitioned from touring to make money to production. Touring all year with no healthcare catches up to people.

I know a number of musicians that tour nightclubs, small venues, and festivals.

They make a living; not a luxurious one, but they do OK. They just enjoy making music, and feel that it's worth it. Many of them never even record their music.