Besides a lot of the other answers which include valid points like treatment efforts etc. in that you’re wasting potable water by just letting it flow out of the system, there’s also the consideration of the capacity of a city’s water supply.
In some places that experience drought, in certain seasons the amount of water available to a large number of people can be very limited and a lot of effort goes into making sure there’s enough for at least the basics.
When the dams are running low, having a half million households pour hundreds of litres down the drain to wash cars and such every weekend could actually end with no drinking water being available.
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