I think that, in general, the desire for the setting to offer hooks to player options is very understandable. I support the general desire for a setting that incorporates baseline assumptions and gives players story hooks for their species, class, and background.
Part of the 4e-era Points of Light setting and the 5e Mike Mearls-era initiative to bring everything into the Sword Coast are both well-intentioned in this regard, I think: the idea that you have multiple different settings each with a snippet of iconic D&D tropes (e.g. dragon wars are in Dragonlance, elemental evil in Greyhawk, etc.) is a consequence of path dependency and it'd be better if we had one setting that was well-served for most adventures and that players could generally grow to love. Focusing on one setting has worked well for Paizo, for example.
I agree also with those who mentioned earlier in the thread that Wildemount was an official setting that very much used modern sensibilities to provide a good, at-the-time-modern sandbox to play in. It helps that the book is fantastic.
The difficulty with creating a 5e-based setting is that, in my experience, changes to the rules might be welcomed mechanically but are often at odds with player expectation. For example, someone in this thread mentioned that a 5.5 setting would be very cosmopolitan, with species intermingling together everywhere, since there's a much greater emphasis on background. Some may want that, but most of the time, when I get a player that chooses, say, a dwarf (especially a new player), that player more often than not wants the quintessential dwarf experience to be true for most dwarf NPCs even if it is not true for that player's particular character. They want the vaulted halls, underground kingdoms, lost treasures, rowdy drinking and loud personalities to be present. I think this is understandable. You might suggest that this player is well-served by other settings, and that the new setting should ignore this. That may be, but now this hypothetical future setting release is fracturing the player base rather than creating a baseline setting.
If WotC wants to create a baseline fantasy setting that incorporates the new additions (e.g. species such as the dragonborn, classes such as the artificer) and defines old additions not well-represented, that is a challenging request. As others have said, it has diminishing returns and it competes for space with settings with an already built-in customer base.
I don't think a new full-fledged setting is necessary, but I would really like some lore support for these new options. There were significant efforts in early 5e days to provide context for traditionally unrepresented races in a general sort of way: for example, Mordenkainen's Tome of Foes had a whole chapter on halflings and gnomes, which had never gotten much attention in Greyhawk and FR. I use that chapter extensively. I am confident we would have gotten to dragonborn eventually if that style of book hadn't been abandoned. Maybe a return to this sort of lore chapter could address those who wish for story hooks for a game component (say, the dragonborn), without alienating the already set customers of other baseline fantasy settings.
