I call them stupid, but mostly because they act like they are stupid. My impression is that Apple's policies basically force them to be like that–they're worked hard, with little time given on each app, and probably graded on some sort of scale that incentivizes finding problems in apps. And, I mean, not everyone is an expert in the App Store Review Guidelines–it's actually fairly long, there's a lot of case law you need to take into account, and a bunch of unwritten policies that only get attention when your app happens to hit it and you know what is going on.
What Apple really needs to do is basically tell all their reviewers to stop flagging apps on this. It just causes general discontent everywhere: it's an obvious annoyance to developers hit by it, and the ones that know how to fight it will drag it on with you and hate you the entire time, and the ones that don't will change their apps and also hate you the entire time. I think–and this is just a guess–that they don't do this because they just don't want to have this content at all, not for any sort of prudishness, but because of the exact same reason everyone else shuns it: it's frequently a source of problems, they get into trouble with it when the news covers it in a bad light, etc. They like having blanket authority in this area, and think that whatever problems they're causing (which they are absolutely aware of, by the way) are just not a big deal, just like they are holding on to their 30% or whatever.
Of course, whatever reasons they have mean very little when the net effect is that this "problematic" content gets hounded off of the platform. You can say you don't hate this all you want, but when the actions you take have an effect in a certain direction and you don't do anything about it even when presented evidence about it, you're basically just accepting that you don't value it very much. And, frankly, that's just total garbage, because Apple wants to control all distribution on iOS, which means they have a moral obligation to deal with all of these issues. You don't get to wipe your hands clean of things you don't like and also say you want to be the sole arbiter for everything. But that's just a familiar big tech thing ;)