Crates recreate the den bitches would generally chose to give birth and raise the puppies in. As such crates are much more natural environments for dogs than dog beds or utility rooms.
They are indeed a cage, what is the problem with that? Puppies like enclosed areas, don’t judge by your personal standards on how you would feel in a cage. If you had a pet mole would you be disturbed by his underground house because he must feel claustrophobic?!
Like any tool, they can be misused. A bad owner can use a collar/harness and lead to drag a dog and even hang them in the air with their feet off the ground - this doesn’t make collars/harnesses and leads inappropriate for dogs. It takes time to crate train a dog, usually a few weeks. Some dogs will never take to a crate, because all dogs are individuals. If an owner just shuts a puppy in a crate for six hours, that’s a bad owner, not a problem with crates - he could do the sameness with a utility room.
Once crate trained it is easier to toilet train a puppy as they tend to have fewer accidents in the crate and less likely that they will chew around the house. A crate trained dog is safer when left alone, when visitors come, when he is eating. He is also more settled during scary times, when traveling, on holiday and when moving house. You can get some of these advantages from a utility room, but a crate is portable, you can take it to a friend’s house, the kennels, your new house, an agility competition, a holiday cottage, the boot of your car, etc.