There are two main reasons for in-person tournaments. The first is socialization, and the second is cheating.
Chess is not a particularly social activity, but certainly more so than staying cooped up at home. And this actually becomes more important as a player becomes more nationally competitive and there are fewer local players that are challenging.
Cheating is also unfortunately a consideration. We have seen in-person cheating even for as little as $50 prize money, and the tournament director suspected it was happening for months before he was caught (the telltale sign was that it was an adult player that rose quickly, which rarely happens). It's much harder to see/detect online cheating. It might be only a tiny percentage of players doing this, but they will ruin it for everyone.
My son has played this year in some of the national tournaments that have gone online. At least one of them required two cameras active at all times, the first being the laptop camera and a second being a phone video stream taken from the side to see if someone is looking at a chess engine while playing.
