Two reasons: 1. It needs to be reversible so you can go from words to lat/lon. 2. They wanted to use shorter words in cities, so the distribution of low n didn't want to cover the full range of m. (this could probably be solved by some sort of banding though).

They wanted it to be proprietary.

They have to do that if they want to ensure locations near one another never share two of the three words, due to the birthday paradox.

Given their 9-square-meter locations and their urban area word list of 2500 words, if you assigned the mapping randomly then within London you'd expect there to be about 70,000 locations with another location sharing two words within 50m.

To put it another way, there would be a 13% chance of a soccer pitch containing two locations that shared two words.