Do people even use ad-hoc mode these days? The only places where I’ve seen this even mentioned was on old Nokia smart phones and networking textbooks.

There have been a few occasions in the last decade when I would have if only Android supported it.

That they don't seems to have as much to do with Android not supporting it as anything. Being able to send messages locally without going through any surveillance checks would be a godsend for protest movements, which may well have something to do with why Google hasn't included it as an option.

It's useful for mesh networking too. We get used to Internet being available everywhere here in places with solid infrastructure but I imagine being able to use ad-hoc would be helpful in a place like, say Gaza. There are tools that help these situations, such as Briar or SSB, but something at layer 2 would allow for a lot more functionality.

If you're connected to wifi and enable android hotspot, it creates a new SSID which routes to the one Android is connected to.

That does not sound like a bug.