Except it doesn't, because there is no esc key. There's a portion of a touch sensitive monitor that may, or may not, have an active region that simulates an esc key, which you won't know without looking at it, rather than being able to rely on the fact that there's a key in the upper left that you can feel for without ever looking at your keyboard, in the knowledge that it always sends the one key code it has to.
If this has never been a problem for you: nice! But it's been so much of a problem for everyone else, and they've spoke up about this so much, that Apple undid that decision.
Yes, there is. Show me a situation where the Touch Bar wouldn't have the ESC button there. Additionally, if the position and location are that big of an issue, there is a setting that guarantees that the ESC key and FN keys are always on the bar at all times.
There is literally nothing that the physical key does that the virtual key on the Touch Bar can't do.
If this has never been a problem for you: nice! But it's been so much of a problem for everyone else, and they've spoke up about this so much, that Apple undid that decision.