The theory given is that it increases recycling by reducing the cognitive load.

Whether that is true or not is left as an exercise for the reader.

The additional theory I've heard is that people stink at properly sorting recycling...

...though then you get the other issue, "aspirational recycling", where things that aren't even claimed to be recyclable end up in the bins.

Supposedly it could be cost effective when China was paying for plastic. Not that the additional recycling necessarily decreased overall costs, just that single-binning could still be profitable at the collection rates people were used to, and people obviously preferred it. Now that China won't take plastic even if you pay them, I'm sure the financials look different.