Honey has now lost 4M Chrome users after shady tactics were revealed

Why do retailers put up with Honey? They're clearly not providing value with the attribution theft. Why give them money?

Extortion, essentially. Honey will actually give users the largest available discount if the retailer doesn't buy into the affiliate program (i.e. the retailer loses money). If they do agree, then the retailer can limit the coupons and discount code shown to customers through Honey.

Why do retailers offer those discounts then? Why not deactivate them instead of allowing honey to give them to their users? Am I misunderstanding what honey does?

That would mean deactivating all discounts. Honey actively scrapes for them, so as soon as a discount is available on the internet it will find it. Not an impossible solution, but not a popular one.

You could probably be clever and come up with a more complicated discount scheme that's not so easy for Honey to take advantage of, but that adds complexity for users as well.