It's about acknowledging the customers frustration, hopefully lowering it by returning the money no questions asked, and ALSO keeping the door open to continue the conversation in the hope for a more positive outcome.
Maybe the customer angrily throws the device away and you never hear from him again. Okay then, everybody moves on.
But maybe he is less frustrated and is willing to have a productive discussion about his problem, provide you with more information and try some things.
Again this might lead nowhere. Ideally you either find that something completely out of your control was the fault, and the customer can admit that blaming you for it was unreasonable, or you find the fault and are able to fix it.
So you might end up with a customer that no longer blames you, or even better one that is now able to use and enjoy your product.
They used to just let customers keep them until people apparently caught on and took advantage of the policy.
I know they trashed them as I was the only company resource in the US and they shipped them to my house to be destroyed. :/
I guess handling the return would cost more than the value of the item, and presumably they really don't want a 3 star review.
(I did not accept the offer, that would feel a bit dishonest)
Also happened to me at least twice with Spreadshirt (but they don't really sell devices). Once the product clearly had a defect (part of the print was coming off), once I ordered it just too small.
I only know the situation in Germany for that, and the law here is not even as straightforward as most customers expect, just the big online retailers are pretty relaxed with their return policies (because that is what the customers are expecting).
There is no situation where you could insist on keeping a defective product, and its also not commonly offered voluntarily.
It's ripe for abuse, so I'm sure companies have to be careful with it, but if it's low margin stuff it probably doesn't matter much anyways.
And also you can in principle be asked to cover any loss of value if you damaged the product or used it in any way that was not "necessary for testing/evaluation".
So far I had to return every item I did not like or that arrived damaged. Especially for obviously damaged goods it makes no direct sense for them to ask for it back to trow it away on their end, but I really think at least a retailer like amazon does not just hand waive a decision like that and has some economic reasons.
Somewhat related, once I noticed a significant price drop the day after I had bought a product from amazon, and asked support if they could refund me the difference. They could not, but told me to just order another one for the lower price and refuse the delivery of the first order (which means the logistics company returns the item directly).
So clearly "cheaper and simpler" for a company like amazon is not always as straightforward as one might expect.