Here are the problems Jutra spells out:
1. Legal stuff, especially older games in stores - do the work to get permissions/legal clearance, and sell the games you can. This is what MS does.
2. Hardware DRM - all you technically need to do is read what the game is, then download a ROM from the internet and run that - again, this is what MS does.
The PS4 *can* emulate a PS2, they just sell a small number of games instead of letting you play ones you own. Same is true of PS3, after they took out PS2 BC. But the PS3 had a full-fledged PS1 emulator, with the discs.
1, yeah. That would always be how it would work. Sell the games you can get a licence for and don't sell the games you can't.
2, There is no hardware DRM for the PS1/2 disks so that dev got that wrong. The copy protection that existed on PS1/2 was basically that the console itself refused to play disks you burnt yourself (i.e. checking if the media was CD/DVD-ROM profile or not)
and in the PS1 case it had additional signatures on the disk so that the console could identify "this is a pressed disk (plus region)" or not.
But there is absolutely zero that could be called DRM or would prevent anyone from reading and accessing the disk on a non PS1/2 console.
Now, when it comes to actual PS1/2 media. I think it would make zero sense to have BC for that.
People that own PS1/2 media in this day and age (==me) I would say already own PS1/2 consoles and would prefer to play the media on the original consoles.
So it would make so much more sense that, as you say, you buy the game and download it from the store. And as you said, they already did just that on the PS3.
There are zero technical reasons why they can't do BC. They have done it before and they already have all the emulators they need and even the shop and download infrastructure.
IMHO if they are not doing BC it must be financial reasons. Maybe they just don't see any point and they don't think it would sell enough PS1/2 game copies to be worth doing it.
(And for the big IP from those PS1/2 days, instead of adding them via BC and emulation, just do a remake of them and sell them as brand new games for 60$ a pop.)
I am certain that the lack of BC is just that they don't think there is enough market for it to be worth spending time on.
I personally still buy PS1 and PS2 games regularely on ebay. But I don;t care if PS5 has BC or not. I play them on my original consoles. I think that is the case for almost everyone else too that still buys PS1/2 games in 2020.
That said, I don't celebrate the lack of BC for those that wan't it. I just understand if sony made this choice based on sales forcasts.