"othering" at social level probably exists, but you are mixing up culture and ethnicity, there is division and kind of caste system within "homogenous" Japan too, see burakumin issue for eg.

so legally for a foreigner the policy seems reasonable, just there is a lot of FUD spread by people who felt entitled to become Japanese with little effort and suffered reality check, see eg. https://m.youtube.com/watch?v=Yj855k5066o