The primary reason for mod/plugin /config separation is when modpack updates occur.
As mentioned previously, Modpack authors can change anything from one update to the next. They may add mods or remove mods. They may also add or remove configs. The removal of configs in new modpack releases, is the main problem.
Some config files might be optional for very complex modpacks, and if the pack author drops a config from their pack, it will persist and not be deleted if we simply try to overwrite files in the /config directory. This may have unexpected results if their updated modpack is now still finding a config file, that should no longer be present.
One excellent example of this is MineTweaker, which is sometimes used to work around mod bugs such as a recipe not present, and an iterm uncraftable due to a mod developer error. So they release a patched modpack, using a MineTweaker script, swapping an alternate custom recipe they have defined just simply to allow access to the uncraftable item.
Okay, next modpack release. The bug in the mod is fixed! And wouldn’t you know it but the mod developer actually decided to use a recipe all their own, that the pack author didn’t consider. but fine, whatever, overwrite all the files in /config with the latest pack release.
But what is this? On brand-new Sponge server installs of the modpack, you find the new recipe that the mod author specified. However, on existing Sponge servers that are simply overwriting the /config dir, they still have the old recipe. Because the MineTweaker script is not present in the new modpack release but it persists, mixed in with everything else old and new, in the combined copied-over /config directory.
MineTweaker remains in use in their modpack because perhaps it is applying other fixes for this next release, under a new script name, and this new Minetweaker script will again not be removed on the next fixed-mod overwrite-update, compounding these differences and weirdness between what the modpack author intended players to be able to do, and what’s actually out there in the field that players are seeing on Sponge servers.
This is just one mod, and one example where modpack servers are going to develop problems due to just copying over the top and mixing it all together… unless we Sponge server admins manually pick through the /config dir and then try to figure out which of the hundreds of config files were not included in this last modpack release we just installed…