Because then there wouldn't be women competing in the top leagues of many sports. Men have a huge physical advantage. On marathons, for instance, there's a >10 minute gap. And people cannot watch each of these separate leagues, they usually want to watch the best in any sports class. It also wouldn't motivate women to play amateur sports if they get completely destroyed by most men.

The current sex-based split is imo still the fairest, though it does indeed cause some issues. The naming might not be ideal. The male class is basically the "open" class. Anyone can compete in it whenever they want. The women's class exists solely to give people who have not recently been under the influence of testosterone and other male hormones a chance to compete with other people with their body type. That's not only women, but should also allow for AFAB non-binary and trans guys as long as they haven't started T.