The reason, I suspect, is fundamentally because there’s no relationship between the uppercase and lowercase characters unless someone goes out of their way to create it. That requires that the filesystem contain knowledge of the alphabet, which might work if all you wanted was to handle ASCII in American English, but isn’t good for a system which needs to support the whole world.

In fact, the UNIX filesystem isn’t ASCII. It’s also not unicode. UNIX uses arbitrary byte strings, with special significance given to a very small number of bytes (just ‘/’ and ‘\0’, I think). That means people are free to label files in whatever way they like, and their terminals or other applications are free to render them in whatever way seems appropriate, without the filesystem having to understand unicode.

Adding case insensitivity would therefore actually be significant and unnecessary complexity to add to the filesystem drivers, and we’d probably take a big step backwards in support for other languages