I don't know.
Maybe it's because the bright, GTAV-like vibe of San Francisco didn't appeal to players in WD2, so they had to choose a setting closer to WD1 in terms of darker atmosphere?
I suspect it was largely political. I recall an interview where one of the devs said they were going to tackle Brexit (from the woke perspective), and immigration and things like that. In the end none of that actually made it into the game and it was largely a flat experience story wise. Seems the devs had little plans for it outside of their initial ideas of woke activism and when one of the higher ups in UB nixed that angle, there's not a lot of meat on the WD3 bone.
They could drop you into ancient Egypt, futuristic Mars, or your own backyard, and it wouldn't matter. Its still the same copy-pasted formula wearing a different outfit
I'm almost positive Watchdogs Legion started off as a completely different game but they couldn't get it off the ground so they slapped the watchdogs name on it and half-assed some missions around it.
That's why the entire game feels like an disjointed unfocused mess, poor mission structure, cobbled together gameplay mechanics that don't work together and an endless string of bizarre design choices.
It is such an extreme departure from the core concepts of the previous games there's just no way this was all by design. They probably had that whole "recruit and play as any NPC" system first and then built a game around it.
London setting was actually one of the few interesting things about WD3. I think playing the game in modern times instead of the near future would've been even better.
Watch Dogs in general had a good run with the choices for the cities to become open worlds. Chicago wasn't picked for video games before and it worked great as a more gloomy location. SF was a safer choice and featured in other games in the past (officially or as San Fierro), but it was still a fun one. And not your typical choice between LA, Miami or NY when the game has to take place in an American city.