The caps was a problem yes. Not just littering, but also in sorting for recycling, where they’d often end up in the wrong place.

It obviously depends on where and how it’s done, but the thing I’ve heard is that due to (the lack of) weight and size the bottle caps would end up in the paper badges, which would ruin the paper from being recycled. It’s better if it follows the bottle. PET bottles (including caps) are shredded, washed and used for new bottles.

Same thing happened to the pull tabs on aluminium cans. Those used to be separate too.