My impression is that BandCamp is not inherently against using new technology to generate new sounds. This decision seems to be not about "what is art" but about "what is good for BandCamp right now".

As a small platform like BandCamp you do not want to be flooded by cheaply generated AI copies of existing songs / genres - this would alienate both artists and customers and could endanger the whole platform. You also don't want to expose yourself to internal complaints and external copyright claims because someone uploaded hundreds of "Popular work X in the style of popular band Y" songs.

The AI slop avalanche will pass by and probably leave behind some cool stuff. In the meantime, it seems like a sensible option for BandCamp to step aside and evaluate their position in a year or two.