I wouldn’t say it was a horrible idea, just one that was short-sighted and handicapped more experienced users to provide simplicity for newbies.
Back then, Apple realized that the concept of file management, using a hierarchical system of nested files and folders, was the single most daunting topic for those uncomfortable with computers. Lots of people either saved everything to their desktop, with comic results, or saved files to some default location which they could never find later on. This remains the status quo for Windows users, for the most part.
The Mac first addressed this with the universal, indexed search feature which allowed the user to instantly find a file without knowing its location. But that only went so far. Anyone who opened the Finder would still have to navigate a dizzying array of deeply nested folders, the vast majority of which contained application and system files which they should never be looking at or touching.
So with the iPhone Apple made a clean break with the past and simplified things to the point where both your grandmother and your six-year-old kid could now accomplish many things without any previous training or experience. This was an enormous breakthrough that empowered millions across the globe. But as we all know, it severely limited file management capabilities for the more tech savvy, making iOS devices seem like simplistic toys unsuitable for serious work.
Ironically, as iOS and now iPadOS have matured, the platform has grown almost as complex as its desktop predecessor, both in software functionality and in UI gestures, to the point where the less tech savvy are once again very confused about the whole thing while more experienced users still feel like they’re working with one arm tied behind their back.