Ridership at different times of day is interdependent, if only for the obvious reason that most transit trips are round trips. If you cut service and thus reject a customer at one time of day, you'll likely lose their business in the other direction as well. The most obvious "time of low demand," the late evening, is also a "guaranteed ride home," which means it affects the overall attractiveness of the product.
More important, a consistent pattern of all-day service (including "times of low demand") is a powerful tool for..<making low vehicle ownership possible> That's is why many transit agencies are now committing to a policy "Frequent Network" that guarantees service over a certain span regardless of trip-by-trip ridership.And from the comments:
It is hard to build up a transit system when most people only look up on it as a necessary evil for the "less fortunate." For a transit system to be useful it has to run when and where it might be needed and not just when it can maximize revenue. Since most transit line recover less than 50% of their cost from the fare box it is probably perceived to be an advantage to run the minimal possible service rather than try to build up ridership to maximize benefit.
Human Transit continues to be profoundly thoughtful about transit.