I was puzzling over Eye of GNOME’s misrendering and wondering what the SVG could possibly be to render so, right up until the point you mentioned the use of foreignObject. Ah, HTML in SVG, got it. Seems a strange choice for export, rather than resolving the layout into text/tspan elements. The only reason that I can think of (other than ease of implementation/laziness) for doing things with foreignObject is so that it can reflow into the available space if a different font gets used, since you can’t depend on the specified font being used; yet I expect such reflow would break at least as many cases as it improved, since the containers for the text are a fixed size. There is no universally correct option for such font substitution in a fixed-dimensions format like SVG mostly is, so I would have thought you’d stick with pure SVG since foreignObject HTML loses you so much compatibility. Calling it SVG export when SVG editors as a class can’t handle it is extremely surprising and I think rather tacky. (See also https://desk.draw.io/support/solutions/articles/16000042487-..., sounds like you can disable word wrap on each text box and that’d stop using foreignObject.)
A more interesting option in this format balance would be doing the entire layout in HTML, and only using SVG for drawing boxes and lines and such when CSS is insufficient. This would certainly be a whole lot more work, requiring deeper layout semantics on the diagram, but could allow better responsive design on the diagram as a whole.
The reason for its usage is historic. Originally, this project was the underlying diagramming library only, that uses the SVG DOM for rendering. There was no application and no SVG export, that wasn't a function of the library.
FOs in SVG gave us the whole range of HTML in shape labels. So, as well as complex text formatting, we used it for tables, complex composites, etc. There a large legacy of shapes that use complex HTML for labels, we can't drop support for those.
The app itself came later and the SVG export function even later. It was fairly easy to generate because we can take it from the SVG DOM. But, converting HTML to SVG requires parsing the full HTML specification and generating the SVG to maintain compatibilty. This is an horrifically large task, it would require probably 5+ people full time, we don't have that resource.
I'm not sure calling it SVG is "tacky". It is part of the SVG 1.1 spec, albeit an optional one, it's not like it's isn't SVG at all. But yes, it causes confusion, thus the entry in the README [1], "It is not an SVG editing app, the SVG export is designed only for embedding in web pages, not for further editing in other tools."
Even using SVG for word wrapping alone, we've repeatedly asked critics how to do that without HTML for measuring the font metrics, we're yet to receive an answer how to do that in JavaScript. We've had plenty of comments pointing out this is wrong, we need a practical alternative thought out in detail.