Why are the default styles so bad?
1. What is wrong with leaving HTML completely unstyled and allowing the browser to apply its defaults?
2. Why is it that the default settings applied by (most) browsers are so awful?
The answer to the first is pretty much, as another HNer noted, the topic of the Better Motherfucking Website page. The defaults suck.
Why the defaults suck is ... probably an accident of history that's difficult to undo. Browsers default to no margins and a whole slew of other stuff, and CSS requires that you either start from known defaults or explicitly style each and every element.
If every browser used its own distinct set of deviations-from-default for various entities, CSS would be even more of a hack than it already is.
Some of the fault also surely lies with standards organisations, including the W3C. If they elected for specific defaults to be applied to all pages, and, by some miracle, browser vendors actually adhered to these, you could conceivably have a world in which most Web pages didn't need much if any styling, and where users could choose to apply default styling to pages.
I do this presently via uBlock and uMatrix on desktop, and via ReaderMode on Mobile. I virtually always prefer the simplified, standardised view to a site's native design.
You've asked a simple question, but a deep one.
Fortunately, we have stuff like normalize.css (https://necolas.github.io/normalize.css/) nowadays.