I really don't understand what's wrong with people not "curing all illness and disability with magic™" in a world where magic exists and is a thing.

See, in most such fantasy settings, magic not only exists but it has an attitude. Sometimes, a conscience, and not a very ethically nice one (if it allows for eg.: necromancy!). Sometimes, magic even is a god (or gods). Even if they aren't, the people who use magic are still ultimately humans (with leafy ears etc but still ultimately humans with costumes, at worst) driven by greed, envy or a weird righteous idea of how should a woman dress and behave when in public.

Would you trust some rando nutjob, who claims to speak for Evelok the Eternal Coffee Mug of Satisfaction, to up and magically conjure you new eyes, new arms, whatever? To alter your body to such a fundamental level? Normal people in such settings are already afraid to death of werewolves and those are quite normal things. Compare: even in our magicless, relatively normal world, we have the power and the money to cure most illness and to treat disabled people adequately yet Obamacare is not universal and we can not trust that the people who give people implants and prosthetics haven't backdoored them to force those disabled people into corporate servitude.

Your player party may be the goodest bois, but they're only one. The various guilds and churches around quite likely aren't such goodies on aggregate either, or else there would simply be no plot.