Because a large number of "preprints" that are really blog posts or advertisements for startup greatly increase the noise.

The idea is the site is for academic preprints. Academia has a long history of circulating preprints or manuscripts before the work is finished. There are many reasons for this, the primary one is that scientific and mathematical papers are often in the works for years before they get officially published. Preprints allow other academics in the know to be up to date on current results.

If the service is used heavily by non-academics to lend an aura of credibility to any kind of white paper then the service is less usable for its intended purpose.

It's similar to the use of question/answer sites like Quora to write blog posts and ads under questions like "Why is Foobar brand soap the right soap for your family?"