Reading this on 2017 iMac 27" - is the first 5k iMac that couldn't be used as a monitor after the computer inside is irrelevant. I hope EU will push for some law that requires all AIO computers to work in monitor-only mode if internal hardware is no longer good enough or no longer supported by software updates. I love the 5k screen on this iMac but the CPU is too old for photo or video editing as software got so much…
during design and manufacturing of the initial 2014 release, there wasn't any off-the-shelf control board capable of driving the display. so internally, there's a customized controller with a specialized 5k mode that appears as two hardware displays, using two displayport channels for interlaced lines. a custom driver presents it as a single logical display to the OS (this is why windows support required a custom driver, and linux still has no support).
so i think primarily the reason they didn't set up target display mode is that they barely got it to work on its own. target display mode would have required significantly more development.
consider that DP didn't even announce protocol specs that could support the 5k resolution or tiled displays until a month before the imac release.
5k imac release, oct 16: https://web.archive.org/web/20171205093037/https://www.apple...
vesa dp1.3 announced, sept 15: https://www.displayport.org/pr/vesa-releases-displayport-1-3...
but yes, disappointingly, later 5k imac releases didn't restore the feature. at this point they have 'sidecar' and i guess they consider that a solution.