The simpler alternative to this is the much vilified and misunderstand system of “naked shorting”.

Basically it would allow credit worthy institutions to meet demand by creating synthetic shares out of thin air. As long as they pay all the associated dividends and maintain enough capital to buy back the shares.

That would remove the entire long and convoluted process of locating borrow, and remove much of the market disruptions associated with “short squeezes”

(Disclaimer: my expertise in stock trading extends to knowing how to spell "stonk", but I've been reading enough HN and Matt Levine to perhaps be better than a Markov chain at this.)

Why wouldn't it be? It sounds pretty straightforward mechanically. A short means I borrow a share from you and sell it to someone else today, buy it back some time later and give it back to you. That someone else has a bona fide stock, which they can lend to another shorter.

If you mean why the metric of "how many [shorts to] edges are active" is being tracked? I'm guessing it's the best proxy for how confident market is the stock is about to tank. Also, shorting as an abstraction is its own thing, so counting how many shorts there are is as useful as counting any other distinct market activity.