Nobody is going to move a dotfile as a breaking change in any established software

We have oodles of counterexamples to this. GIMP did it, Blender did it, DOSBox did it, Libreoffice did it, Skype did it, Wireshark did it, ad nauseum. It’s not really as big a deal as you make it to be (or a big deal at all). You have a transitional period where you look for config files in both locations, and mark the old location as obsolete.

What advantages does it provide

ZFS, mostly. There are some smaller peripheral things (like much better manpages), but these days the big one is probably ZFS. Zero licensing conflicts allows it to be an integral part of the kernel.

It doesn’t change the larger point that GNU is way bigger than Linux, though. There are a tonne of things that are larger than Linux, and GNU is one of them.