I think the "function over form" comment is more accurate than inaccurate.

This battery case minimizes any impact on how you would use your phone otherwise. It retains the thinness at the edges, where you hold or grab your device. The battery is located where the palm or cup of your hand would be, if you were holding the device — which doesn't generally come into contact with the phone to begin with. It's contoured so that, if you pull it out of your pocket, it won't catch on anything.

Also, batteries need physical protection against damage. The silicon protects the edges of the iPhone and presumably make it easier to get the case onto the phone (that is, over the edges and the charging port). The battery is placed so that it is less likely to be damaged in case of a fall and can be padded without adding a whole lot of bulk. It probably also provides the least intrusive charging experience. It doesn't look nice, but it probably feels just fine. Like, a uniformly thicker case looks pleasant, but why not have a battery case that you don't notice tactilely, that doesn't interfere with your charging dock, etc.?

A lot of people have been shitting on Apple for their accessories lately, like this or the Apple Watch dock. But really, Apple just plays up their strengths — like, the fact that they know the exact form factor of every device at launch, that they have tens of millions of Lightning port interfaces and magnetic induction charging discs lying around, that they don't need to pay extra for official accessory certification, etc.

Finally, their accessories place a price ceiling on the market. You can easily get something that does as much as or less for a cheaper price, but you have to go way out of your way to find something that costs more. They don't squash cheaper alternatives, but they practically eliminate price gouging "premium" 3rd party accessory manufacturers.

In general, if there is not a large, consistent demand for a certain kind of accessory, Apple doesn't even consider making one. An additional factor is that people don't necessarily want to wait two or three months after a product launch for a 3rd party to get their products out there. Anyone who is chomping at the bit for the latest Apple product is generally willing to pay a bit more for Apple-branded accessories. But frugal customers continue to have numerous alternatives. So I kind of don't see what the big deal is.