Two reasons.
One is the form factor.
While certainly my ROG phone plus gamesir is enough to even emulate this gen's handheld games. It cannot beat playing a gba game on an Anbernic rg35xxsp.
Second is that some owns a low tier or a very old phone and they don't want to throw it away because it still works perfectly fine.
So instead of spending 300 bucks for a decent mid tier phone replacement, plus accessories, spending 99 bucks is far more cost effecent.
Then there is that storage issue. Some newer phones today no longer have an sd card slot for expandable storage.
Plus some if not all of these handhelds are moddable as fuck too.
I just said, form factor. Anbernic rg35xxsp is the closest you can get to a Gameboy SP. Sure you could argue your Phone controller is far better but these GBA games where designed with the hardware and form factor they have in mind.
Your old iPhone4 can play N64 fine? Show it. Prove it here that your iPhone 4 can play n64 games without frameskip. no stutters, no sound jittering. Heck start with Super Mario Kart, then Mario 64, then what the hell, lets add Starwars Rogue Squadron in there.
Because I am pretty much confident you are gonna have frameskips enabled just to even make the game playable.
Because 180 to 700 bucks SD card you are referring to is a top of the line SD card meant for more powerful devices like the SteamDeck. You can get cheaper ones for less and even then 1tb is just overkill for that.
Also you are totally missing the point here. With a phone, your storage is shared not just for games but with everything else. From videos you downloaded for offline use on your Netflix/Primevideo/HBO/Disney+ bullshit down to your offline music from Spotify and Youtube Music.
Also not to mention these devices have SD cards bundled already so you don't really need to buy one unless you opted for more storage to store more games on the go.
Some people bought the device under 60 bucks. Then I will just also casually bring up again that these devices have SD cards already bundled to them so you dont even have to spent 180 to 700 bucks for storage.
Sure this new device being advertised is speculated to be 99 bucks but its not like this is Anbernic's first device. Im not gonna buy this one but since you asked about what you are missing.
I'm gonna tell you straight to the face I bought my RG351v for 35 bucks in a discount with a 32gb + 128gb SD card bundled and these devices at discounted prices is what makes most people buy them.
You could always argue that most mid tier phones can handle emulation way better than these dedicated handhelds and you are right.
But to say that a 35 to 50 bucks dedicated handheld that can have 4 to 5 hours of battery life as a luxury compare to a phone controller which could cost the same if not more?