There are also various other commercial services offering code push. Even Microsoft has one: https://learn.microsoft.com/en-us/appcenter/distribution/ina...
The stores obviously can punish apps who break their terms (not just around updates), but code push is ubiquitous because so many apps need the ability to fix bugs w/o waiting for every single user to click "update" in a store.
UPDATE: I found this.
Examples of SDK-caused violations
Your app includes an SDK that downloads executable code, such as dex files or native code, from a source other than Google Play.
[0] https://docs.shorebird.dev/faq#does-shorebird-comply-with-pl...
It's be because they can't anyways, what about web pages, feature flags & server side rendered views? The review process is mostly there to not circumvent their payment process.