You are right, of course. It is more convenient, and buses might be driving around almost empty.

Public transport has to cover people with low income though, and just omitting buses altogether would suck a lot if a bus ride was only half the price. If it's the same pricetag, then I get how they came to this decision, from an economic viewpoint; from an environmental and city development viewpoint, putting a town of 36k citizens in taxis is surely suboptimal.

Crowding means the bus is taking less time than everyone riding cars would. Too many people inside a bus doesn't slow you down the way too many cars on a road does.

Extra stops could be solved if drivers knew ahead of time who was at what bus stop - of course, saving time this way means you can't have a schedule anymore.