That's one part of the story, but I think you're glossing over two other issues.

First, digital printing allows anyone to sloppily OCR public-domain works (or download them from Project Gutenberg), typeset the text haphazardly, and put it on Amazon. The result is terrible for reasons that have little to do with the limitations of the technology. Take the Russell book: terrible kerning ("Proble ms"), an AI-generated artwork... and I suspect the rest is about as bad.

The second problem is the technology also encourages "real" publishers to aim lower because there's no up front investment at stake? If you have an older, low-volume book, providing a shoddy version will make you more money than letting it go out of print.