why would you rule out a lab mix, golden, golden mix, even some other breeds, etc

They don't have to be ruled out. Many people fill out the breed questionnaire to get an idea of what traits/breeds/mixes they should keep an eye out for in shelter.

Additionally, if we stopped breeding altogether those breeds would disappear. There wouldn't be lab or golden mixes, there would just be dogs. If no dog had defining breed traits, how would you know if that individual was going to have drive and excel at agility or if they would be quite low energy and prefer to sleep all day? How would you know if your dog would be extremely affectionate or likely to spend all its time in a room away from you? How would you know if your dog was prone toward dog aggression? Biddable or independent minded?

Many friends I know who buy dogs do it mainly on looks alone.

So this is definitely a problem. They would have an extremely difficult time getting a dog from a reputable breeder though because there is generally an extensive interview/vetting process. Saying, "Oh I just think huskies are pretty" will get your email deleted right away.

It sounds like that is more a problem with byb.

I just fail to understand why they are so specific

Many people who are very involved in the dog world develop very strong loyalties to certain breeds or breed groups. Each dog breed is individual in its breed traits and everyone has their own reasons for preferring a certain breed.

To try and give you an example: I wanted a dog that is very active, prey driven, intelligent, velcro, independent minded, aloof with stranger and sensitive. Italian Greyhounds fit the bill perfectly.

I didn't get my IG from a shelter. Poorly bred IGs (aka the ones in shelters) are prone toward leg breaks, skittishness/fearfulness, and often have little prey drive. That wouldn't work for me because I need a dog that will follow a lure, course, do agility (plus rally etc etc). A skittish dog would not be happy or do well in that environment. It would not be safe to have a dog with weak legs doing agility and coursing.

The average pet home will have their own reasons that are perfectly fine as well.

My friend who got a beautiful working dog but never exercises him so now he is super fat and neurotic

And that sucks, but the problem here is that your friend is irresponsible owner and there's a decent chance that dog didn't come from a reputable breeder.

The main idea: rescuing is great. I foster as much as I can and volunteer at our shelters, but that is not the solution to the problem. Dogs get adopted all the time- but they don't always stay adopted. Retention is the biggest problem.

Look to countries that essentially have no shelter dogs or strays (like Sweden). They are very pro reputable breeder and the irresponsible people who get dogs they can't handle usually aren't even given the opportunity because the breeder rejects them.