Switch position isn't just a visual indicator; it's also a tactile indicator, allowing you to to feel the position of the switch when you reach to turn it on, and feel when you've successfully flipped its state. Lights aren't the only things that get hooked up to switches, so an indication of state can sometimes be helpful.

Physical switches also have other UX benefits, such as having zero learning curve, and being easy to operate without looking at them. I've built up enough muscle memory at this point that I don't even have to think about toggling the light switch when I walk into a room in my own home; it's so automatic at this point that if I'm distracted I'll sometimes even forget there's another person in the room and flip off the lights on my way out the door.

These are all minor things obviously; but I still wish I didn't have to sacrifice them to get the benefits of a smart switch. I understand the desire to avoid moving parts; but surely a couple properly engineered solenoids wouldn't be that prone to failure.