DNS is hierarchical, and I don't think devolving into a semi-flat namespace is a good idea at all.
ICANN could certainly afford to run servers for a "flat" TLD system.
The problem for ICANN is that it will sour relations with all the existing TLD registrars, and there are security problems with allowing any TLD. For example, I might be able to redirect traffic for a particular local network host name (e.g. "router", "fileserver", "raspberrypi", "linksys", etc.) to an external IP address of my choosing. Or I can make something that is normally a local file (e.g. "cmd.exe") and make it also a valid hostname.
Interesting idea. Can you give an example of how that would actually happen? Also the cmd.exe one. So what if it's a valid hostname?
CMD.exe is either a program accepts either a filename or URL in the same context (VLC does this), or the user is confused about the URL/file distinction. The .ZIP TLD was concerning for this reason.
I was looking more for specific dangerous use cases; for example, "The user types such-and-such in the address bar, and instead of getting this he gets that." In other words, how is this a problem in actual practice.
An example:
The attacker posts a message to a forum, chatroom, etc. like:
Download: 2024YourCompanySalaryData.zip
When the user clicks "2024YourCompanySalaryData.zip", it is actually a domain name, and loads that website. This website then asks you to enter your corp credentials, or executes a 0-day on the victim's browser, etc.
The forum doesn't need to allow file downloads (i.e. a real .zip might not even work), and even if it does, client or server side virus scanning doesn't have a .zip to inspect.
The user is less wary of phishing, having never seen the .zip TLD. They assume they are downloading a file.
https://blog.talosintelligence.com/zip-tld-information-leak/
In terms of the user going to a site instead of a zip file: If a user is willing to unpack and run a random file he downloaded and give it credentials to something... what's the difference? Not being argumentative, but this seems like a stretch.
Now "foo.zip" is a valid URL.
You could have a forum or chat program that you think is quite safe, since it doesn't allow file uploads, and doesn't allow arbitrary link text, and this would upend that.
Not necessarily a reason not to do it, just a reason to be a little careful in rollout.