The answer to that is: Because AO3, and only AO3, was created specifically as a reaction to mass fanfiction purges (usually anything adult and anything queer) on Livejournal and Fanfiction.net and its mission statement is to provide a hosting service where that will not and cannot happen. Because AO3 actually owns its own servers and is funded through donations, not advertising, it is only beholden to itself. It cannot be forced to delete content through threats such as “Stop hosting porn, or we won’t host you” or “Stop hosting LGBT content, or we’ll stop hosting our ads there”.
The niche it fills could be filled by another platform – such as one made with AO3’s source code (which is open source btw), but it would have to be structured and funded in a similar way to provide the same protection from arbitrary purging that AO3 does. I think there are a couple alternatives like that (Squidgeworld?), but FFN, Wattpad etc. are certainly not it.
Of course, it’s not the backbone of the internet or anything, but it was made for fans BY fans who got sick of their stuff getting deleted, and have poured thousands of hours of volunteer labour into carving out a spot where that won’t happen. It’s not exactly a surprise that the response to further threats is pretty pissed off and vehement.
So no, you’re right, it’s not about useful features at all. All of that is secondary to the real reason AO3 took off and why people continue to defend it.
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