Are there any limitations or problems with the current situation that it's part of core? Asking as this looks more like an enhancement to me, plus not high priority either (but maybe I just miss good reasons).
Doing so, but please do revert my edit if I'm wrong here.

Changing to "Parser" component as that's where the code is located:

./includes/DefaultSettings.php:$wgUseDynamicDates = false;
./includes/parser/ParserOptions.php: function setUseDynamicDates( $x ) { return wfSetVar( $this->mUseDynamicDates, $x ); }

Nobody likes it, and it doesn't work well for languages other than english.

(In reply to comment #2)

Nobody likes it, and it doesn't work well for languages other than english.

"Nobody" as in enwiki actively stopped using it. It would be cool if it worked on all dates, but it only works on linked dates. And linking every date just to make it format per user preference is overkill (which is why enwiki stopped using it).

Do any of the other en projects like it? Most of them don't have date pages to link to. I know wikinews does not use it. I wouldn't be surprised if *literally* nobody liked it.

Why can't it work on every date?

(In reply to comment #5)

Why can't it work on every date?

Because dates are hard, especially when multilingualization and grammar comes to mind. Changing the date format in a middle of a sentence could make it nonsensical or "broken".

Removing this functionality with I609db847.

Merged -> marking as fixed.