Almost no apps need this permission, so being skeptical makes a lot of sense. File managers and other such apps are routinely permitted to use this permission, so it's not like Google is locking out utility apps or anything.
The current state of Google Play is the result of years of Google being too permissive by default and trying to patch things later while desperately trying to remain backwards compatible. Give advertisers a finger and they take the whole hand. Your average Android phone's internal storage used to be full of dotfiles, hidden directories, not-so-hidden directories, all full of identifiers and cross-identifiers to break the cross-app tracking boundary enforced by the normal API.
As far as I know, Google has made an API available for picking a directory to sync with. I'm not sure why NextCloud needs to see every file on my SD card when it can ask for folders to sync into and can use a normal file picker to upload new files without going through a file manager, but there's probably a feature somewhere hidden in their app that necessitates this permission.
The policy itself makes a lot of sense and I'd argue is beneficial for Google Play's user base. NextCloud's problem seems to be that Google isn't letting a human with common sense review their upload. Because of Google being Google, outcry is the only way to get attention from an actual human being when it comes to app stores (Apple has had very similar issues, though they claim their reviews are all done by humans).
EDIT: NextCloud states "SAF cannot be used, as it is for sharing/exposing our files to other apps, so the reviewer clearly misunderstood our app workflow." as a reason for not being able to use the better APIs, but I'm not sure if that's true. SAF has a dedicated API for maintaining access to a folder (https://developer.android.com/training/data-storage/shared/d...). I think NextCloud misinterpreted Google here.
Have you tried manually defining alignment of Rust struct?