It's mostly historical. Browsers accepted invalid HTML for 10 years, there's a lot of content authored with that assumption that's never going to be updated, so now we're stuck with it.
We could be more strict for new content, but why bother if you have to include the legacy parser anyway. And the HTML5 algorithm brings us most of the benefits (deterministic parsing) of a stricter syntax while still allowing the looseness.
> never going to be updated, so now we're stuck with it.
Try going to any 1998 web page in a modern browser... It's generally so broken so as to be unusable.
As well as every page telling me to install flash, most links are dead, most scripts don't run properly (vbscript!?), tls versions now incompatible, etc.
We shouldn't put much effort into backwards compatibility if it doesn't work in practice. The best bet to open a 1998 web page is to install IE6 in a VM, and everything works wonderfully.