Because rent is expensive and options are limited, we've promoted the sigma grindset culture to an insane degree, and people like to cluster together socially, especially when doing something that scares them, like trying to launch a startup. Save on money, be around people experiencing the same things you are, potentially be able to collaborate if you end up working on the same thing, etc.

... but yes it's still weird from an objective standpoint and only makes sense when you insert yourself into the bizzaro world bubble of SV.