First off, the reason we’re talking about this is that it’s something Larian had planned to do, and appear to have decided it’s now not worth it. Most people seemed to agree that in DOS2 the origin characters were just the better option, and Larian said they wanted to make custom characters’ stories roughly on par with the origin characters and I think using the backgrounds was one of the ways to do it. I think that’s why some people are a bit disappointed with the news.
Larian tried to implement them and found that they didn't add enough.
The more the game reacts to what your character does the less important these check boxes take.
If they think their time is better spent elsewhere, that’s actually fine by me. However the reason they gave for cutting it is much as you described. ie all the possible permutations of specific details. But I would argue that they needn’t worry about all those possibilities. They could either make the backstories quite vague and generic, or pick one set backstory for each background (more details in previous post).
I absolutely agree that the decisions you make playing the game are most important, but I don’t really agree that having a backstory should diminish that. It wouldn’t really need to be a very big deal. It could just open up a few different possibilities and change how a couple of select characters react to you. eg. If you get involved in a heist, it would be nice if your criminal background (and maybe contacts) counted for something, compared to being say an aristocrat.
If you get involved in a heist your criminal background will give you proficiency in Perception, Stealth and Thieve's tools.
That's a significant advantage over a Noble's History and Persuasion.
As for the difference with origin characters, I think it would all depend on how far they take it. You’re right that it’s a trade off between defining your own character (largely head canon) and making it meaningful (plus developer time). I doubt there’s an ideal sweet spot that would satisfy everyone, but there maybe room for a good compromise.
I think the best way to do it might be to keep any details of what you did super vague and unspecified, but make the opportunities your vague history opens up more interesting than just the occasional unique line of dialogue.
The vaguer they make them the more insignificant they become.
To each their own I suppose but IMHO Backgrounds are a great story hook to tie your character to your DM's world. They are personally tailored to your character and give your DM ways to personalize their adventures.
When they are generic they just don't add anything significant.
