Encumbrance is supposed to provide a type of challenge, and realism. Though how realistic is carrying more than like, one extra weapon really? Also, it is a weird thing to get hung up on for “realism’s” sake. The best possible argument for encumbrance is forcing players to make choices. In roguelikes for example, you very often only get to choose from a limited number of rewards. In that sense it’s really fun, but you cannot go back on your choice. With encumbrance, if you must, you can keep all your rewards, but it’s just very tedious to do so. So instead of forcing the choice and creating dynamic gameplay, most likely you’re just forcing the player to do some tedious shit. Roguelikes deal with the hording mentality much better than a traditional RPG.
Another thing to note about encumbrance, is that there’s just so much random garbage you can pick up in these games. Someone else mentioned that in real table top rpg, you’re not picking 100 wheels of cheese cuz they might come in handy later. I think it’s honestly just filler content, and doesn’t really add to the game aside from the fact that if you couldn’t pick up that wheel of cheese, you’d feel slightly cheated. I wouldn’t call it lazy game development, but I think “loot” as a gameplay element has a lot of evolving to do. It feels good to get loot, but so often it has to be padded out to feel like you’re actually getting anything. You have to receive it often enough. It has to give some benefit or it just feels like window dressing. That’s a fine line that very few games handle very well at all.