The issue is that it is a small tragedy of the commons. The more apps put templates in the Templates folder the longer that context menu gets and the harder it is use. Context menus have never been a great place for lists of options that might grow unbounded over time. In the early years of Windows 9x you could directly watch that: almost every application installed a Template because it was a new thing to do and Windows encouraged it, then users started complaining they had too many items in that menu and it was too slow and they stopped using it (or never bothered learning it in the first place), then all of the applications stopped installing templates.

(The SendTo folder had a similar wave of too many then too few applications installing to it. I feel like every application that really made sense on the context menu seem to have moved to direct context menu entries in the main context menu rather than SendTo.)