Living in the dorm as a frosh may be a gentler transition from living under often-constant (helicopter) parental supervision to living completely on one’s own. For many frosh, it may be too big a transition from living in the parents’ house to look for an off-campus apartment at a distant college in an area where one is not familiar with landlord/tenant laws and rental market prices, or generally what to look for when looking for housing (or roommates) – i.e. they may be more likely to fall into really bad situations. Sure, the parents can help, but it may not be convenient for them to take time off to help the new frosh look for off-campus housing (and the parents might be more or less picky than the student would be). The OP’s may be kind of a special case, where the school is close enough that the parents can conveniently assist finding off-campus housing, even though it may not be close enough for convenient commuting.
Non-frosh are generally much more familiar with local conditions, so they are much better able to choose off-campus housing and roommates without falling into really bad situations. Non-traditional students are also more likely to have had experience with rental housing, so they are more likely to be able to avoid some problems that naive traditional frosh may fall into. Obviously, commuters continue to live where they lived before starting at the school.
I.e. college dorms are likely of more value to traditional frosh (and their parents) than to non-frosh and non-traditional students.