You're paying for convenience. The deal they make with you up front is that you get to not worry about the tank, but in return you pay a super inflated rate for the gas. Plus you pay for a full tank, even if you return it at 3/4 and it only takes a few gallons to fill it.
I get that some people just don't have the time (or executive function?) to deal with refilling before return on some trips, or they're so rich that they just don't care, but otherwise I just do not get why anyone would accept this option.
A lot of car rentals go on a corporate tab. When high-impact employees are traveling, their time is very valuable. An extra 20 minutes for the employee to spend with the customer on the last day could easily be worth $150 to their employer. Some businesses are happy to pay inflated prices for gas just in case their employee needs that extra 20 minutes onsite before returning to the airport.
Actually the deal, typically, is that if you buy a full tank up front, the per-gallon price is at par or even a bit cheaper than local gas stations, so you save money and gain convenience (that's the pitch). By contrast, if you don't buy gas up front, and don't return the car full, that's when they charge you an enormous per-gallon price. That price is highly profitable and also makes the "up-front" option seem more appealing.
(Just take 10 minutes and return the car full, and don't worry about any of this)
I get that some people just don't have the time (or executive function?) to deal with refilling before return on some trips, or they're so rich that they just don't care, but otherwise I just do not get why anyone would accept this option.