Is my math wrong here? Why does age matter when dealing with the distribution of bonds in investments?

You are not including withdrawals in your math. Many retirees have to withdraw from their investment accounts periodically to pay bills. If the market goes down 10% like it did a few weeks ago, withdrawing funds gives you less material to recover that loss, compounding down periods.

If you add a withdrawal after each period, you'll see that losses (or smaller gains in your scenario) early in the plan will reduce the final balance since there's a smaller balance to benefit from the higher returns at the end.

So keeping at least some funds in relatively safe investments is a prudent strategy. Using "age in bonds" is a rule of thumb meant to be easy to understand and implement; it is not meant to be the most optimal strategy. It may be too much for someone with a lot of different fund that can afford some risk, or not enough for someone that has a tight retirement plan without much room for error.

These are just permutations of the same (annual, I assume) returns. It doesn't tell you anything about actual volatility, which is typically based on the annualized standard deviation of daily returns.

It comes down to risk vs reward: how much are you willing/able to lose in a given year, based on historical data, in expectation of a higher return. You want to be able to ride out downturns, rather than being forced to sell at the bottom. As a result, most people prefer a more conservative allocation for shorter time horizons until the money is needed.