When I had NBA League Pass many years ago, the same local blackout restrictions were there. I'm guessing it still is. The regional TV networks pay for the exclusive rights to broadcast games so if MLB (or any other league) has an app that prevents people from watching the TV network, then it doesn't make sense for the network. The blackouts exist to make people watch their local TV broadcast and/or go to the games live. I'm not sure in today's day and age that works as much as it used to since attendance is down, but last time I checked regional TV ratings for baseball games are pretty high, so it's working in that sense.
The good thing about MLB.tv is that the games become available to view after they are complete, plus you can see highlights as they happen in the video section as the game is going on. It's not the same as having access to watch it live, obviously. Ideally the league could get big money from TV networks and still be able to avoid blackout restrictions on their app, but I don't think that makes any sense for the networks.
It's probably going to hurt them long term but that's never been a concern for Manfred, unfortunately. It's all about money now.