I talked to an ROTC cadet about recruiting this past week and I mentioned how easy it was to be disqualified. She told me it comes down to the military not wanting to be responsible for your death. E.g., if a soldier with depression enlists, there's a much higher chance of that solider taking their own life. Basically, poor health (mental or physical) means poor metrics.

Like in many things in life, follow the incentives. Recruiters tell people to lie on the medical forms because that boosts the recruiters' metrics. But somebody with a high rank doesn't want unhealthy troops because they'll be grilled if those troops aren't fit for battle, or worse, take their own lives, so they may keep arguing for stringent health screening criteria.