I don't disagree, but I think you're conflating secrets with environment variables. Yes most secrets are (or should be at least) passed in through env vars, but there's also a ton (in some apps 80% to 90%) of configuration that
aren't secrets. I also dislike when people treat
every config value as a secret. Secrets require additional overhead and care, and burdening yourself (or another dev or operator) with that in order to tweak a completely non-secretive value is unnecessary and IMHO often counterproductive.
For secrets, a .env file is fine for local dev and docker-compose IMHO. The "hidden file" nature of a .env is a good fit for secrets. (For prod I prefer K8s Secrets or Vault or similar)