You know one guy isn't really a proper scale for proof of concept.

I was kinda excited for ARMS until I played the first test punch. I've read that a lot right after the test punch. You probably can still find the posts in this subreddit.

You are right though that a shit game usually has signs but just look at No Mans Sky. I bet a demo would have prevented the drama around this. People would have seen how bland the game is and wouldn't have thrown full price money at it just to regret it two days later. The devs knew though. They would have been stupid to make a demo available.

Mario+Rabbis is in a similar position. In this case, though, the gamble worked out for Ubisoft luckily. Although I'm sure the bad impression about the game actually helped it to sell because everybody was closely watching how the whole scenario plays out. Nobody would have given a shit if they just regularly announced it and the game probably wouldn't have had such a good start in sales.

And all of this doesn't really change the fact that almost no company is doing them anymore (probably for a reason). Even if they would boost sales I highly doubt they boost it enough to actually be worth the money spent on it. For me there are basically two scenarios when I buy a game. Either I'm interested enough to buy it anyway or I'm undecided enough that a small demo wouldn't convince me.

And here you have to ask the question as a company "How much of the game should be playable in a demo?". Bigger demo needs more investment. Smaller demo might end up without enough return. It just takes too much work to make a demo available. You have to plan a shitload and might not even get a anything out of it.