They’re for different needs.

Yes… but also extremely no. Superficially you are right, but a lot of the arguments of why many new distros are created is just because of human nature. This covers everything from infighting over inane issues to more pragmatic reasons. A lot of them, probably even a majority, don’t provide enough actual differentiators to be able to honestly claim that it is because of different needs. In the end it all boils down to the fact that people can just create a new distro when they feel like it.

Which is a strength in one way, but not with regard to fragmentation.