I don't want to go conspiracy theory, but in my opinion it feels like a dark pattern to increase the time people have Bluetooth on. I believe they did the same thing with success for Wi-Fi. If I recall correctly, even when you are not connected to a device, Google can estimate your location based on what Wi-Fi networks you are in proximity to and something to varying degrees might work for Bluetooth as well which is why they also roll the feature over to the Bluetooth toggle
Then why do I have non-tech people in my life complaining about these toggles within toggles?
For those that want it always on, they could do so just as easily before the update that adds a layer of obfuscation. This is not about what people want.
They already do that regardless of the state of those toggles. You have to turn that off in a different spot.
The main Bluetooth and Wi-Fi toggles otherwise just stop your device from actively associating/pairing with other devices. They do not control the radios.
Wut. Why would they bother when your cellular connection is constantly pinging all towers to literally triangulate your location? Why do something much more complicated to get data they already have?
The real answer is they are a multi billion dollar company with telemetry. Obviously, the vast majority of people never turn off WiFi or Bluetooth. Most people want quick access to connect to a WiFi network or Bluetooth device, not to toggle either off.
Bluetooth give a lot more information about your surrounding (what device your phone detect or connect, for how much time, distance from objects, etc.), not only from your phone alone, but from other people phones who have bluetooth on and e.g. never disable any tracking from google services too. And the Mac address for bluetooth never change, so any device (and tracking company) will know you is forever you. Bluetooth is a privacy nightmare, and this is totally a dark pattern. People not knowing what they're doing is of course a thing, but it seems just a usual bad practice by google, who like to manipulate especially not tech-savvy people