The phone only auto capitalizes the first letter of a sentence. If you end up changing it sometimes it doesn't get replaced with a capital. If you get frustrated with autocorrect features, often modern phones don't allow you to select which features to turn off and you're forced to turn everything off, at least that's how it was during the time i learned to type with the phone. I'm not gen z but I'd say it has a lot to do with it being much more cumbersome to capitalize a letter on the phone than the keyboard.

Plus, there's also the aesthetic, for a while we did it out of angst and to show we weren't all that wrapped up in the modern sensibilities. It seems like the situation as society moved forward may have only gotten worse for this.

If you're confused about something gen z does, it's either:

1) they're teenagers and grew up with phones, get with the times old man

2) a large corporation that didn't have a monolopy on communication (maybe basically everything else too) when you grew up now does and its an artifact of being forced to grow in that world

3) global warming is scary as shit, no one in power seems to give a shit, economies are crumbling, we're temporarily losing the worldwide battle for continued democracy, why wont they stop the war, school shootings, nuclear destruction isn't too close but doesn't look like it's getting farther away, etc etc etc. Basically, "have you seen the world? Why are you even trying, let alone the teenagers today?" type thing.