There are different aspects of this problem.
Crafting as presented makes sense in a sandbox style campaign, where the players may even decide the challenge they want to face, and equipping themselves properly can be an integral, fun and rewarding part of the game. Crafting and strongholds also work wonderfully as gold sinks, and as long as you can create the appropriate time pressure with external events and are willing to accept that important encounters can become easier because of their planning, the game will be fine, even great.
This also requires you to accept that part of the power growth of the characters is decided by themselves, in part, as they can decide to invest their hard earned money, which is one of the best and most rewarding signs of players' investment in the game.
In this kinds of game, depending on the setting and of course on everyone's preferences, it can make sense to show the PCs the "menu" of options of stuff that can be crafted, including material components. If done organically, this can help shaping up the economy of the world and make it feel more organic, and can of course propel characters to explore other areas of the world.
I agree in principle that giving players the freedom to craft the items they want and face challenges with the preparation they come up with is very rewarding, and integral to sandbox style play. In a system where the power level of magic items is properly factored in, I'd have absolutely no worries keeping such a system (even in a story-based game, where I might try to leave some free downtime to craft this sort of thing).
But 5E's magic items are horrendously imbalanced, and allowing the players to craft whatever they want just breaks the game too quickly. The game's encounter balance has no way of accounting for the number and power level of magic items the party might have. Level Up tries to address it somewhat, but even their advice boils down to "Make the encounters a bit harder". In contrast, 3E had very exact calculations on how powerful each magic item was, and could factor in the magic items in a PC's possession to their overall strength, and you could then balance your encounters around that.
The main problem with the crafting system is the fact that A5E has to be compatible with O5E's rarity system, and the rarities are just terrible indicators of power level. Ring of Protection and Cloak of Protection have different rarities, despite having the exact same effect (and yes, the ring is more valuable because you could technically wear multiple rings but you can only wear one cloak, but with the attunement limit keeping the number of meaningful slots capped at 3, this doesn't really matter). Furthermore, some uncommon magic items like the Headband of Intellect fix your stat to a certain number. So technically the entire party could dump their intelligence, survive until Level 5, then mass produce Headbands of Intellect so that they all have 17 Intelligence, and all their other stats are also higher because they all dumped INT. I know this is an exaggerated example, but I'm trying to show how the lack of granularity in the rarity system makes it so that a lot of insanely powerful items can be crafted with too much ease, simply because they are Uncommon.
This becomes a bigger problem at higher levels, due to the logarithmic progression of gold acquisition and magic item costs. So uncommon items usually cap at around 500 gp. If you're following the treasure guidelines in Trials & Treasures (which I generally find to be sensible), a PC can craft their first Uncommon magic item only at Level 3, and it takes almost all of their wealth doing so. I still think Level 3 is a bit early, but it's still reasonable. But at Level 11, you get 5000 gp just from your adventures at that level, and at the end of the level, the total gold you've accumulated over your career should be more than 18000 gold. With 18k gold, you can make one cheap Very Rare item and run out of money. But you can make
THIRTY SEVEN Uncommon magic items. I'm sorry, but one Very Rare item is nowhere near as powerful as thirty seven Uncommon items, especially when there are really busted items that shouldn't be Uncommon in that list.
So even for a sandbox campaign, I think A5E's crafting system is too open for abuse. I've got no problem with crafting consumable magic items, even stuff that would be counted as a minor magic item in O5E (so things like Bags of Holding, Nolzur's Marvellous Pigments and so on). But I feel like a reasonable campaign cannot allow a player to craft more than one or two permanent items. So I'd much rather move those out of the crafting framework, and into something like "You find broken pieces of the legendary sword Narsil. You might spend the equivalent of a crafting activity to craft this into a great weapon of fame, and you might do a similar activity later on to upgrade the weapon into something even stronger. But don't expect going out crafting a new Flametongue or Frost Brand after every downtime."
