My washing machine has wi-fi. I didn't buy it for that reason, but it just happens to. Using the app
So you did not just connect it to your home wifi, but you also allowed the vendor to connect it to their servers. Now the vendor knows the name of your WiFi and the password. Just to begin with. Next year maybe this vendor's website will get hacked and 20000 such wifi passwords go public in some darknet :-)
Using the app, I have some programme options that aren't possible to select using the hardware dials.
Who benefits? You may find it cool to have it in the app, but FIRST the vendor has saved some of their money by not building the needed dials and buttons for these functions. (Or did they give you that discount? ;-))
And maybe in 3 years from now, they don't feel like maintaining your app anymore. Are you going to shout "WARRANTY" at them?
I just can't see the big downside here (other than the fact that the machine is more complicated than it needs to be
Yes, that is a downside, too. Part of this 'smartness' could break and maybe even the whole thing stops working when these 'diagnostics' give false data.
Another huge point is: My washing machines so far have lasted between 8 - 15 years. But NEVER has any wifi-active device lived that long. Think about this difference, and who's the one who benefits from it?