I guess this makes sense going purely by a raw numbers strategy. Most emigrants from HK would probably be settled abroad by the time they had any overseas-born children. Also, probably a great deal of countries offer citizenship at birth as long as one of the parents is a perm resident or something, so this rule would catch the vast majority of those born overseas.
On an individual basis though, I can't see much difference between the average person who is born to HK parents settled abroad and one who is born to HK parents on conditionals visa at the time, but who have their conditions of stay lifted later on (thus becoming settled post-birth).
I admit that I don't quite see how this is the case. How'd you even get in if you're just treated just like any other foreigner and also lack qualifications for an employment visa, money for an capital investment visa, or both for a business investment visa? (ROA/RTL from the transitional rules, or a dependency visa from a parent while under the appropriate age, or a dependency visa via a genuine spouse don't count, as not just 'any other foreigner' is going to be eligible for these.)