It’s more the fact that hardware buttons take away from screen real estate. Yeah, the touch method kinda sucks, but when you’re done with the keyboard it poofs away into more screen.
If you try to put a keyboard on a recent phone for example, and you don’t try to minimize it into oblivion, you’re losing about 4/5ths of the screen. That isn’t a crazy amount, but when you’re playing a game or watching a video, that loses out on quite a bit of space.
Not to mention the aspect ratio would be off for so many things.