The fact that Reddit didn't have a decent mobile app until a few years ago is unbelievable. Indie-developers were shipping a better reddit mobile apps than the company.
The only reason I can see is monetization, with your own app you can control the user engagement better.
I specifically don't use their app because I explicitly don't want all the fluff features they've added over the years. That's also why I still use old.reddit.com.
Reddit makes money through ads. Charging for API access and expecting third-party app developers to build an entire ad platform is not possible. The tech is incredibly difficult to build and then you have to actually get advertisers to use the platform (btw - this is something that Reddit is still failing at versus Facebook/Google/Twitter).
Something like 50% of Reddit's traffic is from mobile users. If Reddit wants to add new features for these users, it's impossible to do so if all the users are using third-party apps.
Bunch of other reasons that I can enumerate in a bit.
If you let third-party apps provide a UX for your data, the app developer will naturally try to make the bext experience they can for users. The first step to doing that is to ditch all the ads. Now you're paying all the cost to host and serve the data, but the third-party app is killing your income.