I was in your boat. I too played AD&D before I was even a teenager and also felt like alignment was odd, though I couldn't put my finger on it. By the time I got to my teens, I didn't like it at all.
I think it infects players perceptions more than just with D&D. The kool-aid also made some of my players scratch their heads why other game systems didn't have it. This is why I rue the stranglehold that D&D has on the TTRPG ecosystem.
I think that an alignment system in this day and age is kind of beyond the pale. If the argument about making Orcs not fully "evil" was to get away from stereotyping about "races", is the problem with the stereotyping of races, or is it also fundamentally with the classification of alignment along 3 axes? I'd be just as concerned with calling a race Neutral Good...because what does that even mean to be Neutral Good?
If the argument is that alignments give color and "it's just a game", I would say that there are better alternatives. When I bought Pendragon around 1984 I think, I found their Principles system infinitely better than D&D alignments. Even the short lived The Riddle of Steel's Passion mechanic was far superior to an alignment system. I can't think of any game (that isn't a D&D derivative like Pathfinder) made after the mid 80s that even has an alignment system. That D&D has carried it forward for almost 50 years is telling. It is telling to me, because I think D&D has maintained this because it has existed inside an echo chamber for so long.
Maybe they carry it forward but give it no teeth because some people find it a useful quick descriptor that they can use or easily ignore?

As far as monsters, D&D oversimplifies everything. The alignments listed in the MM are just defaults, even if that clarification is buried in the intro.