The Pi is familiar and comfortable for a lot of people who wouldn't otherwise use Linux or run any kind of server. It's genuinely not the best option in a lot of respects, but it's also the only thing a lot of people know and going to a dedicated server or generic Linux/BSD router seems intimidating, even if they appreciate the possible advantages.
Pi Hole was started specifically as a project targeting the Pi. It wasn't the first to do ad blocking DNS by a long shot, but it did marry a nice web UI to DNS and made it a lot more accessible. Nowadays I think there are much better options like AdGuard that do the same thing, but "running PiHole on a Pi" is a tangible thing to do with the RasPi you got as a gift and is an approachable project for a lot of Linux beginners with real benefits. You can find a million people on YouTube recommending exactly that, and walking you through how to do it step-by-step on a RasPi. Lot of people who are interested in tech but not so skilled probably don't have dedicated servers or know how to set one up, and I expect PiHole on a RasPi gets a lot of momentum from that as something cool and actually useful to do that isn't actually difficult/there are a million tutorials for.
Tl;dr is I agree with you, there are clearly technically superior options. But for a lot of the people you're referring to the alternative is not to run something better on a dedicated server/router, it's to do nothing at all and go back to using the router from your ISP.