This is just my own take, but I feel like at least part of the reason they went back to releasing new versions is because of the recent resurgence of macOS. Not only do Macs have the excitement of Apple Silicon, but they have annual "new" OS releases; even if not much has changed, it creates excitement with their fanbase. I think Microsoft realized that it's not very exciting to just be on Windows 10 forever. So we got Windows 11.
I think that Windows 11 is just a name and even if they hadn't named it that we would have gotten the same features as an update in Windows 10. Windows 11 is nothing more than an update. And Windows 12 probably won't be much different. Increasing the number version of Windows looks much better to the average user.
Makes you wonder if they're going to just start implementing the version number on every update, sorta like Chrome does these days. Will we see another Windows 95 eventually?
Apparently the source of that wasn't an official statement by Microsoft. It was some offhand comment in a dev conference that kind of got out of control.