Why? In my gym, when learning Brazilian jiu jitsu, we started free sparring almost from the get-go. You learn a technique, you practise it. Like swimming. Or, say, squash.
Nothing at all wrong with that. It's very judo, in that way, BJJ is (especially as seeing that BJJ is really a stripped down version OF judo), and judo being the traditional art that it is, it emphasizes ALL aspects of martial practice, reishiki, kihon, kata, randori and so on.
Kano formulated judo specifically to conserve the old forms, which were in danger of dying out, in part, due to the onslaught of western attitudes and practices (boxing and wrestling got real popular in Japan in those days and in fact, many a jujutsu and judo practitioner made a living taking on all comers in the wrestling or boxing ring).
Where most modern (post Meiji) budo went wrong is targeting an educate-the-masses methodology in their curricula, and working hard to avoid injury at all costs. In most cases, the old schools concentrated on developing a small handful of students and left the mass training to the spearmen and foot soldiers (Point your spear THAT way Yoshi, and do NOT trip your squad-mate!).
The old arts realized and PRACTISED the idea that every technique must be tested. But they also knew that technical expertise could be amplified and enhanced by what many want to call 'dead' practices, such as static basics and repetitive forms drills. Anyone calling classicla arts dead in that context knows little or nothing about those systems.
Free-play is only one part of practical and thorough budo training.
If you can't do the basics and don't drill them, all the sparring in the world is just flailing about.
And yes, I'm a classicist. I do the old forms. Love 'em. And have also pursued CQC in a professional context (and have some scars and am missing a 1/3 of a collarbone to reflect my experiences in that realm).
My practice in the classical budo only ever enhanced my CQC and quite probably saved my life at least once, and maybe more times...
Those who disregard the classical budo (NOT modern karate, aikido, TKD and so on, by the way) in favor of the MMA paradigm are really only getting a small piece of the whole picture.
MMA methods are an excellent teaching paradigm, and have been exhaustively studied and implemented in many classical systems, but many folks who practice those classical arts have little or no interest in doing the (very nearly WWF style) competition seen in most MMA sport combat.
Competition in those terms is irrelevant to the goals of most classical arts. That's why you don't see those guys competing. It isn't interesting or relevant to what they're doing. I know, aside from my old bones, old injuries and bad attitude, I feel the same way.
When I was young, I loved competition, and competed avidly. Now, however, I care little for such, and prefer to focus on a different sort of accomplishment - my own, irrelevant and unconnected to whether I am the baddest mutha on the block.
Been there, done that, got some scars and a few pretty medals for my efforts (and $120 a month from the VA), and vastly prefer the slow and steady classical methodology to the flash and fast burn of 'modern' concepts.
YMMV, of course.