Ear buds make the music the primary source of auditory information.
Car stereo sounds just add to the general background noise.
It is very important to hear the important background noise in my opinion - any extra sensory input makes driving easier and safer.
Of course, a loud pumping car stereo is just as distracting.
All of those do indeed distract, but they don’t take your mind away from the car itself the way earphones or a handsfree phone call would.
At least with all the other things (including the phone call), you have access to hearing what’s going on around you. Earphones (especially earbuds) remove that feedback.
I would liken it to driving with very very dark sunglasses. You can still see, some - but if anything unexpected happens you don’t get enough data to react.
Why are we not outlawing fancy cars that go to so much trouble to soundproof the cabin, so you’re not annoyed by all that nasty outside noise?