I’m with you to a degree, but if most anyone’s email account vanished, or worse was stolen, I’d be pretty confident guessing that they’re screwed.
For more typical social media, losing a decade of pictures is pretty harmful. It’s not about the value of the @danny handle, it’s also about the account being gone. And the privacy issues if the new person got all the DMs and private info.
You're right that these things are devastating when they happen, but pre- social media, they happened all the time. Every year, half the people born in [year-21] lose their university email accounts (including their google drive, etc.) and eventually transfer to another email just fine. Before online identity, people lost their phone numbers and had to inform friends that they switched to a new one. You'd get the previous owner's texts, and have to tell them you just got that number. Or if you moved addresses and you would get the previous owner's mail, and the same would happen to you due to postal errors. People lost their pictures because of disk failure, fires, and other means, and would continue living happy and productive lives.
Post- social media, if people are backing up their data, then the problem is pretty much nil (chances that your social media account and your local storage both go kaput at the same time are pretty small).
Of course email isn’t new and neither are phones. Things like 2FA are new, as are other things assuming you still have the phone and email you signed up with. The problem isn’t the thing, it’s the services that rely on the assumption that you still have the thing.
For more typical social media, losing a decade of pictures is pretty harmful. It’s not about the value of the @danny handle, it’s also about the account being gone. And the privacy issues if the new person got all the DMs and private info.