The reason you can’t do that is because Obsidian is the glue on top of the plain .md files. The strength of Onbsidian is that it’s not required to edit them.
Setting Obsidian to open all .md files makes no sense because unless they are already in your vault Obsidian can’t see or link to them.
Iy’s disabled because it could cause conflicts if Obsidian is trying to access stuff outside your vault which is not allowed or reasonable. Since Obsidian can’t know that you might have files elsewhere it sets the limitation to access for Obsidian from within Obsidian.