panasonic lumix - Why does lens distortion correction in Capture One also crop?

I tried to get the answer on the official forum here but it was non-conclusive for me. I am trying with a more concise question here:

When I import the RAW files from my Panasonic Lumix LX100 into Capture One 8, lens corrections are automatically applied upon import. I am guessing this is the lens correction from the manufacturer and not from Capture One.

Right after import the image looks like this:

And when I disable "Hide Distored Areas" it looks like this:

As you can see in both images, besides the distortion correction a seemingly useless crop is also applied. In both images the crop could have been less. But Capture One or Panasonic thinks that it is a good idea to degrade image resolution/quality even more by applying some additional crop.

Why is that so? Why does Capture One or Panasonic think hat this is a good idea? Wouldn't I get better image quality if I remove that crop? Wouldn't it have more image information?

Answer

More image information? Yes. Better image quality? No. The parts being truncated don't scale well because of the rectangular pattern of your sensor's pixel wells versus the curved shape of the correction. So a lot of artifacts can show up in those areas.

Like many products intended for mainstream consumption (as opposed to niche products used by experts in a particular field), the designers of your Panasonic Lumix L100 have apparently decided to automatically apply the fix that works best most of the time. Giving pro level options to consumer level products almost inevitably leads to criticism from buyers/users who don't have the skill and knowledge to properly use the tool in their hands when given advanced options. Instead of recognizing their own limitations are to blame, they loudly criticize the product for being defective.