1) The actual risk calculation is somewhat nuanced, but advocates are very clearly on the right side when you do it.
2) The advocates drastically oversell it as a coping mechanism for it being hard to convey nuanced issues, and even come to believe their overselling.
3) Some who go along at first gradually gain some intuition that they've been lied to, and wrongly conclude or begin to behave as if the advocates are on the wrong side.
In the case of storing passwords in plaintext, it causes a low probability increase in chance of a some very bad outcomes.
It can be correct that it's well worth mitigating, while also being a hard calculation to reason about and find salient. If we compensate by treating it as if it's a high probability event in order to get everyone t comply, and begin to believe it ourselves, people may eventually notice that not everyone is compliant, but they never see anything bad happen in their immediate surroundings, become increasingly lax themselves, notice nothing bad is happening still, etc.
Seatbelts are maybe a counterexample to my point here, where people have come around despite their personal experience never including an accident. Maybe with the help of laws, or maybe more because it's personal risk to self. Or maybe it's just that enough people know someone who has had a bad car accident even if they haven't themselves.