It really depends on the company culture. Yeah if the standards are higher, and your manager will give you a hard time over it, and you have to fight for a raise, it looks terrible.

If the company has lower standards for internal hires, and tells managers to expect and encourage internal mobility among their reports, and gives raises and salary transparency (i.e. you're a level 2 engineer, this is the range that we pay level 2 engineers, and you're in the Xth percentile), internal mobility looks awesome.

While there are some inherent advantages (location and benefits consistency), you're right that many companies try to price those advantages in or worse, and it's often a bad deal. It's up to the company not to do that

So I don't have to move, make new relationships, make my kids change schools, tons of reasons.

Often people are following other "rising stars". In larger companies, as managers ascend to more significant roles, a set of trusted "loyalists" is very valuable as you move up.

In those cases you can move as fast as the "rising star" and not deal with the massive chaos/uncertainty of switching jobs.

Every new job is a sea of uncertainty: you don't know underlying power structures, and for techies, your technical ability is strongly constrained by the intricacies/NIH nature of build systems, frameworks used, libraries, and existing code bases.

These are good points, and maybe people don’t always consider them enough. But I guess on the positive side, with an internal move you usually have a clearer idea of what it will really be like to do the job, and that may be worth a lot.