how does that make more drivers come to a specific place/time where demand is outstripping supply?

By paying drivers more. Surge pricing would work only for drivers, and be averaged out for customers so they don't see a change in rates. It would encourage more people to use Uber, that are turned off by surge pricing. But maybe Uber doesn't want to have them as clients during surges, depends on the ability to scale to demand.

So you make riders that intentionally ride during off times subsidize riders that want to go home during peak times. Pretty lame solution if you ask me.

The thing that I like about dynamic pricing is that it forces people to think about what they are doing in a broader context. "maybe it's selfish of me to expect a $3 ride home at 1AM on Jan 1st"

Yes, if your main concern is to protect Uber against surges, you're right. But customers also perceive this as an attempt to extract more money from them when they are in a bad position, such as during a crisis.

Why not take the "insurance policy" style and average out these surges?

If you want regulated prices, why not use taxis?

Being an Uber customer and complaining about surge prices is beyond hypocrite.