It's peacock feathers. You demonstrate company/product health by burning cash keeping your design "modern", even if a simpler but less-expensive-looking design would have been better for UX.
This is true, but as a signal it still does work. If the front end is flashy, they definitely put some money and resources into it, which means they have those to begin with
This is a good point and ties into the whole funding trap. I imagine some founders find it difficult to show a shitty looking MVP when you have investors looking