The physical distance confers no latency advantage.

Is this because of signal speed anyway reaching almost speed of light?

Maybe 70% the speed of light. That's a handful of cycles at a few GHz for any SDRAM channel. The latency limitation is caked in to the scanning, strobed nature of SDRAM. It's dense and cheap, but it will never respond faster than ~20 ns (100+ cycles).

I wonder what stops AMD, Intel in trying this, except loss of modularity. It is not like the architecture will change by bringing it into the die. As far as I remember, CPU is the only thing that does RAM access even in x86

I would be surprised if they’re not evaluating this. The only difference I can see is that it complicates the number of SKUs they’d need to provide to their customers. It’s a little easier for Apple in this regard because they’re also building the final machines, whereas Intel/AMD are making chips that are going in a wider range of devices.