I can see from this question Can I cite a paper published after the initial submission of my paper? asking if it is okay to cite papers after submission is answered as, yes- and sometimes you need to.
Alternatively, the question here Recently published paper deliberately not citing our very relevant work -- anything to do? suggests an answer to not citing a paper was because it was found out during the revision.
I think the question is a bit tied to my thinking and past experiences that I have seen in which the idea of citing papers that were published after the submission easily leads to abuse through long reviews. Meaning, if a reviewer sits on a paper for a year while publishing related work, it becomes an easy argument to make that the paper is now outdated and does not have significant contributions. Likewise, one could wait until their own paper is published first to then say in a review that there is some paper that is relevant and should be cited.
Besides the malicious aspect, it also seems to open the door to never-ending reviews. Say a researcher creates something, does an experiment, and compares against other work. Then during review a paper appears. A reviewer then asks to compare against this new work. The person compares against that new one, submits, and during review a new paper shows up and repeats the cycle.
I know there are guidelines and ethics statements that say a reviewer delaying a manuscript for their own benefit is unethical, but are there guidelines that look at it from a timestamp point of view (e.g., papers are reviewed on the merits at time of submission)?