In contrast to Roguedad, my DH works at an Oxford College, and discussions with his college's admissions tutor was that passion for the subject is what they're really looking for, not an ever growing string of A levels. Indeed, discussions with tutors at DHs current college and old one have really emphasised passion for subject over everything else.
Indeed, the Oxford Uni website says this:
"Some candidates take a fourth or even fifth subject, as this can be one way of demonstrating the academic ability required for the intense study of an Oxford degree.
This is certainly not the only way to demonstrate your abilities. Tutors may prefer a candidate who has read around their subject beyond school and college work, and who shows a great passion for their subject, over a candidate who may have taken more subjects, but who is unable to discuss their interests with any enthusiasm or in any depth.
We also advise candidates not to spread themselves too thinly. Our offers are made on the basis of letter grades rather than UCAS Tariff points, so grades between AAA and AAA would be sufficient to meet most conditional offers, but two As and two Bs would not."
However, his college whilst being a big name is only mid league on the Norrington Table. Perhaps other colleges have other priorities, or things have changed since Roguedad worked there ..?
But this thread certainly answers the thread title - why do schools advise so badly..? Well, it really is not clear cut what different universities want. Some unis actively value the EPQ and give reduced offers for those who take it (Southampton a massive supporter) but others less so. Teachers are not experts, and don't have the time to actively research all the different Degrees and universities and whims of the different admissions tutors. When the answer is not clear cut, it makes it very difficult to advise (especially when students don't know what it is they want to do!)