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I'm not sure what answer you need right now, but you are asking "why Microsoft" when no one here can give you that answer. For all we know, it could be a bug. It's best you contact them about it and see if you can get answers that way.
This is what you get when a company has a complete monopoly over the world. I have nothing to hide, but that doesn't mean I have to give my life to unknown shady people who will abuse my identity to gain something, while throwing me under the bus. We live in a world of AI and just a pinch of personal information can end up who knows where. Someone might murder a person 5000 km away and just provide my ID. Can you imagine the problems I would go through or anybody else who gives info online. The moment you connect online they already have all the info over your IP address, if you give them that yourself they cannot be blamed.
This starts with unlawful data collection which games you start (not only MS games) with the help of A/B tests by XBox Gamebar Software, this continues with explicit login to the Microsoft Partner Network (linked Windows account and data linked to it), keystroke logging (depending on the software/widget), unauthorized uploads of files, overwriting the local account by logging into a Microsoft game. Plus Bing, MS WebView as permanent telemetry and data monitoring services, geodata localization e.g. The latest additions are Recall and CoPilot, which also work with Webview. The list could go on and on...
Unfortunately, many consumers do not care about such behavior. Consumption first, entertainment anyway and everything else doesn't matter.
The only thing that helps (and not against everything)
- Do not install, start or buy any Microsoft games. This includes also mobile products
- Block all outgoing connections from the operating system as far as possible
- Use a local Windows account
- Windows System hardening
- Do not use the MS app store or other MS software. If it cannot be avoided block connections as far as possible
Microsoft unfortunately takes everything they can get. Legal, illegal and everything in the legal gray area. End consumers must take action themselves.
Apart from complaints to the data protection authorities and consumer protection, the only other option is to refrain and avoid as much as possible.
And as a counter question, why should consumers pay a company for such behavior? It's actually pretty stupid.
ONE MORE THING - as I own a copy of AoE2DE, I bet it is the same process for all their games, you should be able to link your Steam account and not create a dedicated Microsoft-XBOX one.
It's not a problem if they do, we are all already in a system for decades unless you're in the middle of Antarctica and nobody knows you're there, the problem begins the moment when they abuse person's ID themselves or sell it to someone else for reasons unknown. You too should be concerned who you give your personal data despite if you have nothing to hide. There is 8 billion people on this planet and ID mix up might happen to you. The consequences of that you don't want to know.
Only lifelong victims fall for every trap and complain later, the rest of us think before we agree to shenanigans and never have problems like this.
Of course we "miss out" on things, but generally it's not an actual loss.