A team that e.g owns its own microservice IaC can absolutely maintain a setup long term with app & db in the same state, it just requires care and love (it's easier in some ways, it just doesn't scale along certain dimensions).

Maybe you have other controls / factors that can make it work for you.

But my experience is that as you split things across more teams or have more complicated IaC "supply chains" (eg teams supplying modules to each other or have lots of ppl working on different bits of the same thing) you need to look at ways to make things more foolproof, easier to support and give yourself as much "wiggle room" as possible for upgrades. At this point having state split out is very helpful (almost essential).

Because the terminology seems to be tripping up the conversation I'd be inclined to phrase it like this: a single "terraform apply" should be touching a precious, stateful stack or a disposable stateless stack and these should be clearly delineated. Ideally the stateful stacks should be as small as possible, as much stuff as possible should be in the stateless stacks.