> I wonder what the thought process of the Go designers was when coming up with that approach.

Sometimes we need block scoped cleanup, other times we need the function one.

You can turn the function scoped defer into a block scoped defer in a function literal.

AFAICT, you cannot turn a block scoped defer into the function one.

So I think the choice was obvious - go with the more general(izable) variant. Picking the alternative, which can do only half of the job, would be IMO a mistake.

I hate that you can't call defer in a loop.

I hate even more that you can call defer in a loop, and it will appear to work, as long as the loop has relatively few iterations, and is just silently massively wasteful.