It's bad for the developer, sure, but what exactly is "insane" or "illegal" about it? They have created a product marketplace, and they let you sell there, and you must abide by their rules.
If you want to sell on Gumroad or similar services you also need to use their payment processor of choice, and give them a cut. If you want to sell on Ebay, you also need to use their payment processors of choice (and originally, iirc, you only had the option to use PayPal) and give them a cut.
And of course check the rules for selling your console game. They are 10x more restrive, and have been since forever. Not only you have to use the console markers marketplace, billing system, and pay a cut, for many wont even be able to do that, unless they accept your game.
The thing is, you don't "have" to sell in Play Market - even if it was the only marketplace for Android, it would still not be some basic necessity of life that you sell apps for Android. You could always find another trade, or sell PC software, or whatever. In other words, a marketplace for a mobile OS is not exactly a public utility.