It's a business relationship and should be treated as such by the employees. Employee loyalty is ridiculous because it's clearly only one-way loyalty.
Companies provide some value for employees that they don't get back from them, and vice versa.
Employers can "demand" loyalty, but as you say, it's basically a request. There's no legal basis for it or anything.
I think it's fine to have a culture of loyalty. It probably means you have a pretty good company. Demanding it doesn't work, and if it's not real loyalty, we don't have to be mad about it being one-sided.