Probably because Cindered Shadows is a draft that they went with long before the game released and then some poor soul had to write a coherent story afterward. People say that the worldbuilding is deep, but I genuinely believe the devs could not give less of a shit and that it was more of an afterthought. I mean, there's one map that I can think of that takes place in Brigid and it's a reused map with bland aesthetics.It's not that its just a side story, it's that it's a side story that introduces questionable content to the lore and doesn't make much sense. Why not a DLC in Dagda, Brigid, or (even better) Morfis? Why has no one talked about this fourth house until now? Why is it so easy to find them? Why did we not hear about the apostles until they were introduced (I think) in an update? They had tons of opportunities to do a side story in a unique location and culture and instead we got this.
A side story wasn't even my preferred DLC, they seriously needed to focus on adding content to CF and SS. But at the very least tie the side story into the main story a bit, like doing a DLC on a culture we've heard about but haven't seen.
As I said, this game is overly ambitious. A side story that takes place underneath Garreg Mach is easier to program than say, a fortress in Dagda that looks nothing like the monastery. At this point, it wouldn't surprise me if the devs were more concerned about finishing a half-baked product rather than putting the time and care into a work of art. I think that answers why the lore is dumb. This game really does feel like a product than a work of art. I know that sounds gay, but play any of Kaga's games and, while they're not perfect, you can tell he really puts his heart into his games. I would argue that Vestaria Saga had more integrity than 3H. And that game had a budget of a penny.
While I do agree that a side story in Dagda or Morfis would have been more interesting than someone's basement, I would have preferred a story that took place during Serio's war against the Agarthans or Nemesis. In fact, I was actually expecting it. Not only is it a pivotal moment in history, but a lot of the assets from the base game could be reused. They already have models of the major characters and some of the maps are relevant historical sites. All they had to do is design new characters, specifically the ten elites and the other Nabataens plus a new Sothis design and also rework the pre-existing maps to fit the times.