Hmhm. Don't know if this will make sense, Monday morning ramble brain, but here goes. So, my own TTRPG stuff is all based on a generic system (Savage Worlds) which is a lot lighter on implied lore or setting than 5e is and is largely me writing my lore for that, but also setting rules etc. And that's sort of how I think of the bigger TTRPG systems, their utility is that there's a generic set of fairly core rules that players and GMs can carry between games and discuss their variations on, and then the additional crunch and setting is added secondarily? I don't think that's quite the same as a complete separation of lore and mechanics, more that some lore comes separately with its own mechanics and some mechanics are generic to the whole system, if that makes sense. I don't think having entire books solely for lore tends to work well for me, but if that lore is coming with mechanics and some more specific modules, monsters, rules, etc, that tends to feel a good model.
You see things like this variation of specificity and where the rules are in the system a bit with how D&D monster books have evolved over time in different ways, sometimes the trend is to try and make systems like "what happens if ayou get swallowed by a monster" generic to avoid repetition, but in some editions they're treated more as part of the monster entry itself and indeed are not necessarily consistent between similar monsters.
For me, I think a core rules + supplements system makes a lot of sense for bigger TTRPG things, but I may partly just be used to that having gotten into gaming via things like Warhammer where the model is a generic core system and then each army/faction having its own book and rules. There are advantages to being able to bat issues with the core Savage Worlds rules around with people who don't have an interest in the sort of early medieval folkloric-fantasy I run games in, and to sometimes being able to pick up supplements for inspiration on a modular basis even if I'm not likely to run them on their own, where I might not shell out for buying the core book for a whole system just to leaf through it for ideas.
All that said, I think with smaller RPG products it's definitely a bit different and it can make a lot more sense to compile the whole thing as one book - for example, I have Grant Howitt's Goblin Quest sitting on my desk (I've never run it, sadly) and I don't think you could easily do more than very tiny supplements for that. And I think the balance of what I enjoy in RPGs tends to need a high amount of lore depth so whether it's in separate books or a core book I like to have it there, though I do also tend to be heavily towards the end of writing my own lore and in my view the biggest challenge with TTRPG setting lore work really is finding ways to get it across to players that don't involve setting them lots of homework. So that'd be my biggest thought focus when doing something with an unusual setting, thinking about ways to write the lore that help the GM get it across ideally in-game and meaningfully in play.
