Litestream is just a backup solution. Should probably be compared to a backup solution for postgres that does automated backups over the network etc. That isnt part of postgres.
Besides the question wasnt litestream vs postgres backup apps. It was sqlite vs postgres.
People care about things like long-term support. Postgres 13, from 2020, is still officially supported. Litestream 0.1.0 was the first release, also from 2020, but I can't tell if it is supported still. Worrying about the maturity, stability, and support of an application database is very reasonable in risk adverse projects.