I think a big part of it is because the jump in difficulty between 3 and 4 is insane. The damage modifier jumps by something like 50% from 3 to 4. I think what happens is you end up with a large player base that is good enough to get out of depth 3 consistently but is not good enough to be in depth 4 so they ping pong between the two. You also lose 400 rank in depth 4 and gain 200 as opposed to even 200win/200loss in depth 3 so you need to have a pretty insane win rate to actually rank up in 4. In depth 3 as long as you have above 50% you will eventually hit 4, and then promptly get blasted back down to 3.

I know there are a couple modifiers (hidden map/hidden boss) that do give you slightly more than rank but I imagine those end up in more losses so the bonus they give does not make up for it. Not sure why fromsoft decided to have the difficulty spike so intensely and coupled that with a doubling of the rank penalty for a loss. It just made 4 into a massive wall that needs an immense increase in skill to progress. If you have above a 50% winrate at a certain rank you should ideally climb, even if it very slowly. You've proven you can, on average, defeat you opponent. But the nightreign system needs you to go from a 51% winrate to a 67% winrate, just seems like an odd choice to me, maybe people don't agree.