I think people may be confused by my choice of words in the subject.
I'm not suggesting people disallow it. In the years I've been playing 5e I've never seen anyone customise a background. Many people don't even seem to realise that it's an option.
So what I'm really asking is do you use or know people that use custom backgrounds? They seem to be under utilised in my personal experience.
I haven’t seen players take advantage of the ability to choose custom backgrounds either. I see a few reasons for this:
1. Despite being explicitly mentioned as an option in the core rules, a lot of players have a lot of anxiety about picking options that the DM might disallow. Nobody wants to fill out a character sheet, only to be told they’ve chosen an option the DM has banned, so some players hedge their bets, only taking the most vanilla, “by-the-book” options available unless specifically told by the DM that they can do otherwise.
2. Some players like the additional restrictions. When you have unlimited options it can be hard to decide on anything, so if there’s a package of “recommended” skills, tools, languages, etc. many players are happy to pick one of those and call it a day.
3. Personality Traits, Ideals, Bonds, and Flaws. I have never once met a player who wanted to come up with their own set of these traits. Nor a player who wanted to read through all of these features from every background to decide which of the examples they like best. Usually, they would rather pick a background based on its name, then either roll for those traits, or read the list from the background they’ve chosen and pick their favorites from those.
4. Starting equipment packages. Most players I’ve played with (though admittedly not all) prefer to take the starting equipment from their Class and Background than take the starting gold and buy their equipment. Now, personally, I tell players if they want to take a custom background, they can take the starting equipment package for what ever background their Background Feature is associated with. But, similar to above, not a lot of players want to read through all of the Background Features and starting equipment packages to see which one they like best. They’d rather just take the background with the name they like and accept whatever it comes with.
Ultimately, most players I’ve played with will take convenience over customizability every time. I see a lot more standard humans than variant humans for a similar reason. No one wants to risk being told “I don’t allow variant humans” (even though I do), and +1 to all ability scores is much more convenient than choosing a skill and a feat.