This is the first time I've actually heard the opinion that someone thinks we need more apps instead of more functional websites.

Better PWA support gives users (and developers) more optionality with app distribution. Apple building out these APIs would not take away from their native apps.

The UX of visiting a site and with a single click of a button having an app on my home screen sounds great. I'd also like to have the option of side loading a native app too. And if those options sound unappealing, you can keep using the App Store if you want the assurance of using an 'officially approved' app.

A lot of very prominent apps are written using web technologies anyways. Take a look at the continued popularity of React Native (and Flutter as well).