I think the main argument is that it hurts MSU. I personally don’t care very much but it’s comforting when Michigan can get most of the guys they want in-state. Where it matters most is with elite prospects like DPJ.
Michigan has no real advantage to sell a anonymous 5-star recruit. You want elite academics – play at standard or Notre Dame. Huge rabid fanbase – Texas or Ohio State. Winning/NFL production – Alabama. National prestige – Notre Dame. Weather – USC. etc. So the times when you can have “home” on your side – you want to see that make a difference.