Oddly enough, by one way of reading what you say here I think you're agreeing with me...underneath all the disagreement bits.
Your last sentence - the effort...will be wasted - ties it together. Yes that effort will be wasted, which means having it not be wasted only adds to the stakes in the challenge of keeping the character alive.
You're quite right that survival isn't the only way an RPG can be challenging. It's one of many ways which in total add up to the overall challenge, or demands, presented by the game. Removing or greatly nerfing the survival portion of that challenge therefore reduces the overall total challenge; hence my here-paraphrased statement
lower lethality makes the game less demanding is and remains true.
And if it was only that one piece that had been reduced then, well, OK. However, side-along with this numerous other once-challenges have also been reduced or greatly mitigated - level loss, item destruction, rest-recovery-healing speed, spellcasting in combat, to name a few* - which makes the lower-lethality piece simply a part of an overall trend: the game is less demanding on its characters and therefore is less challenging to its players.
* - worth noting that none of the examples I listed cause the effort put into developing personality etc. to go to waste as (with the painful exception of losing more levels than it has to give) the character will very likely remain alive and playable after encountering any of them. Now, obviously that play might have to be approached a bit differently - if it takes a few days to recover one's hit points, for example, a modicum of caution around taking on more combats might be called for - but the personality etc. is still there.
A slightly-hyperbolic example, then: players in Monopoly would doubtless all prefer to start with loads of money and be unable to lose the game. Once this became apparent in the wild, should Parker Bros. have altered Monopoly's design to make it this way? Clearly, no; or the game becomes pointless.
The same principle holds true in D&D: make it too easy and remove most of the "loss conditions" and eventually much of the point goes away.