Freemium isn’t the only option to allow people try the app before buying it. There are free trials that allows to use the app for several days and then asking to pay the full price to continue using it.
Has apple ever given a reason why they dont allow demo/trial apps?
A time limited trial seems like the perfect fit for productivity apps, not sure entertainment based apps would want this model. You have a day/week/month to use the app in its entirety, if after the trial you value the product you purchase it, otherwise it no longer works.
I don't think they ever gave a reason. Personally I like how it has forced developers to come up with more creative product offerings than time limited demos. While convenient for developers, time limited demos suck as a user experience IMO. The whole "trial expired! buy now!" experience is very grating.
I am fairly certain the "trial expired" experience is exactly the reason. They're also trying to make a commodity out of software and having an app store half full of trial versions doesn't help them with that goal.