The documentation clearly outlines that there are multiple signals being analysed. Relying on play integrity alone is definitely not sufficient as you state.
This is necessary because the wallets contain an identity proofing functionality called PID(Person Identification Data). Showing these credentials basically approves you are you. There are high requirements for identity proofing that even pre-date wallets and that makes sense, because the potentially blast radius of identity theft is huge. Historically, these have been secured in smartcards, like eID cards or passports and are not shifting to the smartphone. Verifying the security posture of your device and app is therefore crucial.
Banks actually have high fraud rates today because of weak security mechanisms. If attackers steal your money, the bank will reimburse you. If attackers steal your identity, you are really screwed. Security requirements for banking and identity are simply different.
Preventing credential duplication is a requirement to achieve high level of assurance. One of its purpose is to limit the potential damage that can be done by attacks. If credentials are bound to hardware-bound keys, attackers will always need access to this key store to make any miss-use. If you don't prevent duplication, attackers may extract credentials and miss-use them at a 1000 places simultaneously.
This is due to many parts of the system being spread across multiple IETF RFCs, which happens as OAuth was improved and made more secure over time. Efforts are underway by combining all important parts into OAuth 2.1, otherwise have a look at FAPI 2.0 security profile for high assuance use cases.