Might be a rookie question. But exactly why would chat history not work?

It would, just not on new devices without moving keys via already-trusted device. This is what WhatsApp presumably does

That's the thing, it does not and it has been known that it does not do this. The keys are stored on the server and the server sends them to your device on login. They do have some kind of machine-id encoded in it, but that is just for show.

This is a total misunderstanding of how E2EE works.

I need to either enter my password or let the app access my iCloud Keychain to let it derive the backup encryption key.

It's also well known that they worked with the Moxie's team to implement the same E2EE protocol as Signal. So messages are E2EE as well.

I can sign in from my apple device to my android device purely using my credentials so as far as I know it is just for show.

I guess I owe a clarification: Otherwise your message history wouldn't be available the moment you log in with your credentials*.