This AP sales embargo has a way of pitting different groups against each other. FYI, I used to live minutes from the DLR, and we spent a bunch of money in the parks when we were APs.
But, yeah, some people really did bring picnics into the park. My family once had to endure waiting over an hour for a parade next to an extended family that had spread a beach blanket on the sidewalk, and were boisterously enjoying all kinds of pungent delicacies out of tupperware containers.
They had quite a system worked out, actually: they apparently dropped off an older family member with the blanket to reserve the spot (she was there when we got there.) Then, at some point, others arrived with baby carriages loaded up with food (and a couple of babies, to be fair), and started unpacking everything. Finally, the rest of the family arrived and they started digging in. One could almost imagine that was a frequent thing, and the parade, itself, was just the cherry on top rather than the goal.
The AP program had allowed some local guests to treat the parks like...their local parks. Because that's what you do at your local park, right? Someone in your group reserves a spot for the family, others bring the food, then they all show up and enjoy a picnic/party. If you're lucky, there might be entertainment provided. Some rides for the kiddies, etc. For $XX per month, your family got a membership in the best, most amazing local park ever. And, since you've already paid whether you use it or not, better use it as often as possible to justify the expense.
The above true story was an extreme example, but I can tell you that it was the norm to see families reserving space with blankets, and not at all unusual to see people clearly eating outside food throughout the park.
Yes, knowledgeable AP holders aggressively snapping up prime viewing space night after night does somewhat lessen the experience for casual guests who might be spending relatively more money per visit. And I can see why Disney might prefer that more higher spending guests were admitted than lower spending ones. From what I've seen and heard, things hadn't gotten to that point in Disney World. But I can see why Disney might not be keen to continue selling APs on the West Coast.