Couldn't they (Microsoft) fork it if requests got rejected?

Yes, but then they have to integrate all future changes to the original to keep their fork in line with new features, bug fixes etc.

I don't see why people think that this is such a monumentous task when the alternative is MS developing an entirely separate browser.

Maybe I'm naive but it seems that if a fork happens, a team or two of good Microsoft engineers could keep the fork up to date with features from the original branch.

Chromium is an incredibly complex codebase, and they change their internal API's quite rapidly, so upgrading is a lot more difficult than you would guess. For example, this is what it took for Electron to upgrade from Chromium 69 to 70: https://github.com/electron/electron/pull/15405/commits, and Electron doesn't even make that many modifications to Chromium. If Microsoft were to make a decent number of changes, they would need a whole team of people just to import Google's changes, and if they start adding major new features I doubt they'd be able to keep the two in sync at all.

Additionally, this is nothing good engineers really want to spend their time on.

I would do it if the money was right but there is also the risk that Google may make the codebase intentionally difficult to port to the fork. I don't think such an effort would be sustainable in the long run.

It's not an easy task indeed, but it's very feasible. We have some examples of that kind. Firefox' fork PaleMoon is doing well, thanks to individual efforts of approximately one man. RedHat used to backport a ton of features to their Linux kernels across the major version numbers.

"used to"?

Microsoft explicitly said they won't.

That doesn't mean anything. They can and will change course depending on the circumstances, and the community could agree with them depending on what the circumstances are, effectively making it a non-issue.

No, it does mean something, in that it affects Microsoft's entire product strategy (i.e. deinvesting in the browser). I don't see Microsoft changing course on this.