The Webserver Servers a file or an endpoint. This file or endpoint have indeed be found. On this layer the transaction was successful.
So if you return 404 on this layer you are saying that whatever file or endpoint you searched is not there.
If you ask for a resource at an endpoint that does not exist e.g. via an parameter in the url and return 404 it is not clear if the endpoint does not exist e.g. the endpoint.php is missing or the resource you are looking for. Leading to questions like: is the endpoint down, is my internet wonky, did I misspell the name, and business logic related questions: is there no such widget, is the widget out of stock, should I call another endpoint?
404 does not indicate non existence but it indicates an inability to be found by the server. It's a nuance and it only matters when it does and then it bites...
