How cool would it be to have a permadeath mode for the game, for people who want a permadeath mode for that extra challenge? For me, grounded 2 started getting a little easy (aside from bosses) and would be cool to have a permadeath.

You can do that manually. just quit to menu and delete your save when you die.

I get your point that a player can choose to do that if they want to, but there are reasons that mode exists in multiple games.

In many players’ heads those two scenarios are not equivalent. Permadeath mode forces the issue. Manually deleting your save is a choice. There are players that would fully agree with you because it’s easy for them to make that choice and the end result is the same. Other players would find it practically impossible to intentionally give up their progress without the game forcing it. They might want the challenge, but they struggle with the actual choice after starting. The human brain is a mysterious place.

Knowing/showing that you have a 100% completed save file in that mode is typically something a player can take pride in.

And then there’s the competitive gaming category of players who would want a mode like that simply to decrease the need to trust an honor system when comparing times/stats/etc.