I’d say LEO is where we want these, no? My understand is that if SpaceX went defunct tomorrow, the satellites would (eventually) burn up on reentry, so there’s no risk of them managing to fragment and become more permanent bullets wizzing around in our orbit. Or is that incorrect?

Thousands of satellites are immune to anti satellite missile, with only a few dozen geosats one country could blow up those sats and cut a few ocean cables and cut off most of the International transocean internet access. That's a good thing, because it makes it so that any nation preparing for war isn't tempted to cut off internet because it wouldn't work anyway.