I have 2 questions.

The first one is:

What's the benefit of creating a diversified stock portfolio over just buying an all in one ETF like Xeqt or Vgro and such?

I know there's tons of benefits for the opposite, like that it's cheaper, simpler and does not require much effort for rebalancing. But why would one opt to do a stock portfolio instead? Are there any benefits?

Second question:

If I do choose to go for an all in one ETF, how do I pick the best one?

Xeqt contains a globally diversified portfolio but the returns seem tiny when compared to a US portfolio like SPY (tracks snp500), which in turn seem to have returns much less than a lesser diversified QQC/QQQ (tracks Nasdaq).

Do I chase stability/ diversification or do I chase returns (SPY and QQQ are still pretty diversified?

Do I put part of my money into Xeqt for stability and part in SPY for returns?

For context: I'm a 25yo who just started investing less than a year ago (~25k portfolio)

I know what you're gonna say "invest in a globally diversified portfolio that will win you many kittens in 20 years blah blah blah" but for argument, I want to know why the opposite may be true.