When it comes to console mods it is entirely the platform's corporate overlords (Sony/Microsoft) who decide just how restricted mods will be on their platforms.
As someone who used to be heavily invested in the Fallout 4 PC modding scene and its console modding initiative; it was such a miserable experience trying to share mods to Playstation players because Sony completely restricted its platform to basic in-game changes ONLY. That meant ZERO external assets of any kind could be implemented for the Playstation version, you could only do the most basic changes using the official Creation Kit modding tool, which is extremely limited on its own. So Playstation players did not have access even to the most basic standard of mods one would expect, not even the Unofficial Community Patch which fixes the game entirely (a limited LITE version was made which had to drop all fixes using external assets).
*Important to note that this is not a technicality issue, Sony intentionally deprived its players of the beauty of modding, which they're doing again with BG3 from the looks of it.*
Xbox on the other hand was not restricted in modding capabilities. It fully allowed proper mods with external assets, but naturally any mod requiring the Script Extender could not be shared to the console because on the console everything has to be packed within the game's specific archive format, which 3rd party files like the Script Extender can't be packed into as they're loose files that only work from the game's root directory.
Not to mention that console modding scene is also heavily regulated to the point of stupidity. I had my popular accessory mod taken down on Xbox because I used to call it 'Tomb Raider Accessories' (its creation was inspired by the Tomb Raider trilogy) as it had ropes, knives, holsters and hundreds of other accessory thingies for the character to wear in order to look like a wasteland adventurer, which massively evolved since its initial creation. So had to reupload the mod as 'Crimsomrider's Accessories' instead. A few others got taken down for the same reasons... it is very restricted and regulated.
So this has nothing to do with Larian, they have no say on the matter. It is how the corporate overlords Sony/Microsoft decided to restrict mods on their consoles "for the players".
