That’s true, but once you trust a new device, there’s no reason the authority (your phone that has all history) couldn’t transfer the history over to the new client.
I get it would add some complexity, but it could be done in a secure and private way.
I feel like that is also by design. If your account is compromised, you wouldn’t want them to be able to pull messages from your existing devices. It kinda defeats the purpose of them not being stored on the servers.
They removed this support, because it was misleading users who thought they were getting E2EE when using it as an SMS client.
I’d be interested in utilization data before and after that change. Anecdotally, I use Signal much less after SMS was removed. With one app, I could opportunistically use Signal, when the other person had it, and send an SMS otherwise. Now I have to decide what kind of message to send before opening an app and learning my options. Most of those quick messages have moved back to SMS for me.