Mostly cloud base hosting companies like Kinsta, Wp Engine, SiteGround, etc are encouraging their customers to move on to the latest PHP version and ending support for the older version of PHP. Because in the newer version of PHP, the core developer team has fixed security and performance-related points. Sites running on the newer version of PHP are way more secure and fast as compared to the older version.
But updating the PHP version on your production site can break your site and affect your customers. As WordPress is open source and most of the plugins and themes that we use on our site are also open source. Some functions in your theme or plugins are not compatible with the newer version of PHP 8.*. So we have to make them compatible first.