yes, I understand all of that. The work is being done/earned in a local city/state and it many cases, is legally taxable in that state. (Some states do have reciprocity agreements.)
I can assure you that if you do not live in California, but come to CA to perform work, that work is subject to CA income tax. No question. Now, does everyone that comes to CA to perform work complete a non-resident tax form? Of course not, but that just means that they are ignoring the law.
It is my understanding that Big Four consultants, who live/work on the road, complete time reports for work done in other states and then Payroll sends them separate W4’s to account for hours/salary for work performed in the respective states.
OTOH, independent contractors paid on a 1099, are responsible for taking care of any required state/local taxes for work performed inside teh state borders.