Indeed. And if you want a lot of people to board the bus efficiently at the same time, you need them to agree to congregate somewhere before the bus arrives. One might call such a meeting point a “bus stop” :)

I think a bus could stop in the middle of the street, but a bus stop still removes dependence on a smartphone and protects from the weather.

Taxis/Ubers/... can and do stop in the middle of a street. Why would that be different for a bus picking up a single person?

funnily enough, they get designated spots and they still just stop in the middle of the street

If you keep asking self driving bros questions you can get them to eventually reinvent buses and trains. It’s fun!