Word budget? It's RPG there shouldn't be really word budget.
Games can stay english only, and they are playable just fine. Localizations are just optional.
Not to a company trying to make as much money as it can. Also, French, German, and Spanish translations were a specific stretch goal for Eternity so they were obligated to deliver them.
But this is basically just a company greed. Supply and demand, if people wanna play game in different language than world wide language english. Fans should translate it themselves (and release pirated version with theirs own translation, proper hand made translation takes time, and the game already sold all copies in theirs country.) I actually prefer Sengoku Rance fan translation over original. It felt more juicy and the characters had personality. Official English translation is grammatically correct translation of Japanese text.
Pillars promised translation into additional 3 major languages. They should calculate costs, and they shouldn't promise if these translations were not viable. PoE had million of these "watcher" texts that were completely not part of story. Yet, somehow that was less problematic than 300 pages more words? Decent translators are not that expensive. Voice localization cost more, but... Sidequests could be unvoiced for budget reasons, and people would understand it. And, when RPG is more about text than action, like PoE, voice acting just gets into the way.
Profits? We seen in Wasteland 3 what happens when corporate greed gets into way of artistic expression.
What is so hard to understand about the fact that studios need to make sure game development resources are spent efficiently?
In addition to the very real issues that word count leads to additional work being generated for others besides the writer; such as localization, editing, scripting, and testing; the writing itself takes man-hours. The more writers write, the more time that takes. Time that could be spent elsewhere. Either on other writing tasks or other jobs the writers may be able to be tasked with. Often they do design work, scripting, or may have other responsibilities (possibly related to running the studio in general or other projects). Full time "I only write" writers are rare in game development.
Word count guidelines are one of the project management tools for project directors and producers to help make sure they are getting the best use out of their writers time. Saying that project directors and producers shouldn't set guidelines to manage man-hours and ensure developer resources are used efficiently is silly.
Plus even if you ignore development resource considerations. More words isn't always a good design choice. There is always a point where a piece of writing is using too many words to accomplish what it is trying to accomplish.