I’m not trying to be rude, but how has someone with 15+ years on this site and 11k+ posts been oblivious to how IDs in the Wallet works? There have been many posts and many articles about it. I’m not sure why you would have a different expectation or be ignorant about how it works.
I think the OP is being purposefully obtuse because you're right, this has been covered to death.
Much in the way that NFC payments (neé ApplePay) were few and far between at first, Apple (and Google—digital IDs as a standard, not some special Apple magical and amazing nonsense) are attempting to solve the chicken and egg problem: While having robust infrastructure for reading digital IDs in place first,
then allowing people to add their state ID to their digital wallet, would make some sense, that's rarely how these things work. Just getting states on board with issuing digital IDs in the first place requires tremendous infrastructure changes and has been a slow process. Once that's in place, then the ever widening circle of organizations (from federal law enforcement to local law enforcement to local retailers, and so on) that are able to read the data securely and act upon it as needed will start to increase.
Enabling TSA to read digital IDs makes sense because their need to do so is concentrated in specific locations and their need to access that data is consistent across all interactions. It's a testbed for interactions that are more variable or far-flung.
And no, the ID does not "look" like a regular license: The data is all held securely, and can be read by a special reader, again just like ApplePay.