Has a modern engine ever failed from insufficient shifting down? I feel like it’s a non-issue in reality in modern engines?

Also I assume your point doesn’t apply to diesels, and I’ve noticed the same shifting down in diesel autos.

I doubt a modern engine has ever failed due to a single instance of lugging. they are pretty robust. but it does put unnecessary stress on the engine. it's similar to cruising on the highway in a low gear. the engine is designed not to fail at 5000 rom, but that doesn't mean it will last as long as if you just drive normally. why risk an early engine failure just to save a few dollars at the pump here and there?

and the point does apply to diesels, the same as it does to any engine with pistons and a crankshaft. it's just that the operating range of a diesel is a bit lower.