Making a case-insensitive password checker is trivial if the passwords are being compared in plain text, but requires a bit of forethought if you do it with hashed passwords. In particular it's impossible to add this feature after the fact if you already have hashed mixed case passwords in your database. So the likelihood that passwords are unhashed goes way up.

No it doesn't, case insensitive passwords have nearly half of the entropy. It's less bad than plaintext password storage but only barely.

Most passwords don't have capital letters unless forced by stupid password rules. This only makes it so accidental capital letters don't prevent you from logging in.