I didn’t really word that “item 2” very well; .htaccess files impact the directory in which they are placed, *and all directories beneath that directory *in the filesystem directory tree unless modified by an .htaccess file in that directory, and so on).
Re-write rules are one component of many .htaccess files, but not the only one, and other .htaccess based directives that can produce unintended / undesirable results remain an issue. For many, it is just simpler to separate the directory trees.
One other thing to consider is that with many hosting companies (in the past, the great majority of hosting companies, each “sub-domain” set up the way DH does it counted as a “hosted domain” and cost money. This probably contributed to many users going the "sub-directory route instead of using a “sub-domain” DH style. HEre, it costs nothing extra!