Why did they design a PLA and then use it like this rather than going a bit further and designing an ASIC? I guess because MOS sold the same PLA to other people?
> A gate array is an approach to the design and manufacture of application-specific integrated circuits (ASICs) using a prefabricated chip with components that are later interconnected into logic devices (e.g. NAND gates, flip-flops, etc.) according to a custom order by adding metal interconnect layers in the factory.
https://en.wikipedia.org/wiki/Gate_array
PLA's job is simple: it basically contains a lot of combinational logic, transforming some inputs to some outputs. It generates a CS output based on a memory address and bus signals, it's just an address decoder, you can build the decoder using a large number of logic gates, but it gets messy and expensive. You can build a full-custom ASIC for it, but it's expensive and unnecessary. The point of PLA is allowing one to create a custom logic circuit to replace combinational logic by burning the logic on a general template, it was the right tool for the job.
Even today, modern equivalents of PLAs are still used. Some companies provide FPGA-to-ASIC conversion service using mask-programmable array, it allows you to burn your FPGA design to the silicon for a moderate performance boost, without the complication of ASIC redesign.
I don't think they sold them to other companies, MOS was at this stage fully part of Commodore. Commodore was really big on vertical integration, they didn't like buying components from other companies if they could help it. They even manufactured a few 74xx logic chips sometimes used in their 8-bit computers.