It is, in fact, extraordinarily difficult to format street names well, especially at ever-changing zoom levels. What would it look like if you look at the whole city with "all street names" enabled? If you can't actually show them all, how do you decide what streets to drop? What if there's a small but important street, or a street with a long name that doesn't fit? The edge cases are numerous.
Agreed, we don't need "show all level of details" when that's not tenable. I'd just prefer Google Maps to be a bit more "dense" when deciding what zoom level to show details at. This is particularly a problem with maps locations-- it's far too easy to get the incorrect impression that a building you are looking at is entirely a Denny's when in reality it's a strip mall with 5 businesses if you zoom in a little closer...
Every OSM-based mapping programming I’ve used handles it basically fine. Considering the amount of resources Google has, I find your claim pretty ridiculous. Google is actively choosing to hide street names and actively choosing not to provide an option to override that. This is quite clearly a business decision of some kind. They could certainly do this if they chose to.
Let's start with the simple rule: if a street name is big enough / important enough that Google Maps would consider showing it, it should show it. Always.