Caps Lock isn’t used often enough by the average person to deserve its own key — especially one of such prominence. Everything you do with a computer doesn’t warrant its own button on your keyboard.
Sure, typing in all capital letters is certainly useful for particular tasks that fewer than 1% of computer users will ever perform, and sure, Caps Lock might sometimes even be useful in a casual setting too, like SHOUTING SOMETHING IN A GROUP CHAT or writing an acronym without exhausting your pinky.
But here’s the thing: a toggle with the same functionality could easily be activated in a number of different ways for those who really want to write things in all capital letters. (Say, for example, double tapping the Shift key, like how it already works on your phone.)
Caps Lock is one of the largest keys on a modern keyboard, and it’s in one of the best spots — right next to the home row. It’s taking up prime real estate, and it’s not paying its rent any more.