It seems that the approach to the game itself is a factor here. If your campaign consists of murdering monsters, invading their homes, and taking their stuff, or "wacky hijinks" or just "exploring a strange and mysterious world", alignment has no real function, and might even get in the way!
Campaigns that more closely scrutinize the characters and their interactions, with deeper roleplay, politics, or epic "saving the world" plots might end up needing a mechanic like alignment. But not necessarily!
For example, Bob is a L/G farmboy*. His village is attacked by goblins, he takes up the sword and protects it. When the local lord puts a bounty on goblins, he joins an adventuring party and engages in willful genocide, not thinking much of it, because all he's seen and heard of goblins has dehumanized them.
At some point, however, deep in a goblin warren, he comes upon a chamber of goblin children, and a matron who valiantly defends them to her final breath, despite being completely outmatched.
If the campaign is supposed to be a long, ongoing struggle against the goblinoids (ala "Red Hand of Doom"), the ensuing philosophical debate and Bob's horrified realization that goblins are people too might completely derail the proceedings entirely, unless the DM is willing to ditch their planned adventure path in order to explore these unknown waters.
I don't see any problem with DM's who make either decision- it takes a lot of effort to plan out games, let alone negotiate with the world outside the game to schedule and make time to even play them! If you bought a megadungeon or adventure path with the intent to run your players through it as far as they can go, having the game be sidetracked with questions of "are we the bad guys?" might put a spanner in the works they simply don't have the time or inclination to deal with.
OTOH, if you have the luxury, ditching the current game (or drastically changing it's scope) to suit alignment dilemmas is also perfectly cromulent.
Basically, alignment isn't for everyone, and despite that, the game has rarely taken the stance that it can be optional. Instead, it's been retained, no matter how neutered it's impact on the game is, because it's seen by many as some essential sacred cow, despite the fact that if you really like alignment, patching it into a game shouldn't be an issue whatsoever. It's often less a mechanic (in the same way AC or Dexterity are mechanics) and more of a narrative tool.
*This example veers closer to "alignment-as-morality" than "alignment-as-allegiance", but it works for both- if Bob had been devoted to Law, and saw Goblins as Chaotic, seeing that they are fundamentally similar to his own kind might seriously make him wonder if Law is truly the "right" side of the conflict.
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A big part of the problems alignment have caused over the decades is something I rarely see examined. Simply put, the design of character classes. Initially, the game was built on the bones of a wargame, where the players take on the role of "champion" units- warriors who can take on entire platoons of foes, magicians who function as portable siege units (I'm suddenly getting a flashback to the "conservatism" thread here), eventually followed by undead hunters armed with "miracles" which later fused with the Battle Bishop Odo archetype to become the heavily armored saintly Cleric we know today.
Sometimes these hero units would explore dungeons, at which point they began to be placed into roles- the Fighting Man could stand as a bulwark to protect his allies who could deal damage and heal with their magic.
The Thief came next, armed with rules for "everything else" that the early classes couldn't do (some have seen this as a terrible mistake in hindsight).
But later classes like the Paladin, Ranger, Druid, and Monk (followed by Barbarians, Cavaliers, and a whole army of classes found in the pages of Dragon Magazine)* didn't fit neatly into these roles. Well ok, the Paladin, Ranger, and Barbarian could do the Fighter's job, but they came with restrictions that meant they didn't necessarily play nice with other characters- Paladins and Thieves have an almost built-in rivalry, Barbarians distrust magicians of all stripes, etc. etc..
It seemed as if the newer classes were almost intended to create strife between characters, between proscribed and prohibited behaviors and restrictions on alignment. On paper, Joe's Paladin can replace Bob's Fighter, and Sara's Druid can replace Meg's Cleric...but in practice, the Paladin intensely dislikes interacting with "Neutrals" and the Druid is incentivized into derailing Joe's extreme L/G behavior in order to preserve the cosmic balance!
This becomes less of an issue when the game "breaks out of the dungeon", and the game explores it's third pillar more, but it remained a problem for a very long time- players were told "all these classes are available to you", but never were you instructed "don't mix Paladins and Druids". Never was it said "hey this class? It's for very specific play patterns".
So you'd have players bellying up to the table with Rangers and Assassins and while I don't know how universal it was, much of my early AD&D experience had less to do with adventuring and more to do with figuring out how not to be killed by other player characters who had built-in reasons to take me out!
