Having been on both sides of this, and having worked closely with "the business" doing requirements analysis, project management, tech-leading and individual development, my conclusion was that your original view is somewhat closer to the right one than the PMs.

One may ask, from where does the tech industry come from? From where tech startups come from? Why is there such a thing as the "tech" industry at all? Don't all companies use tech? We don't talk about the "science industry", do we? If you try and find a definition of tech firm that captures what people mean when they say this, you'll conclude they're basically either computer companies or ordinary firms doing ordinary things, who use computers more effectively than normal. And in the latter case what makes a firm a tech firm is basically unarticulated, people know it when they see it but it's not like there's a set of rules to classify, say, Netflix as a tech firm and Disney as not a tech firm.

So what is it that people see? Mostly it's the distinctive culture that appears when you have (ex-)programmers at the very top of the company, as in CEO and/or board level. This causes companies to differ in all sorts of ways, but one way in which tech firms differ, for example, is that in tech firms you don't get terms like "the business" and "IT". You don't get non-technical project managers. The distinction between the two sides simply doesn't exist.

Non-tech firms live in fear of tech firms and startups. It took me a while to notice this, but go to enough conferences, talk to enough people and you'll see it. The average firm is far more scared of Google or Apple encroaching on their space than they are of an established competitor. This is because tech firm culture is more effective than their own. Such firms have a long history of coming from nowhere to utterly dominate entire industries very fast, and they don't know how to respond to it.

The cultural problems can be seen in the stories you were told. Programmers who understand the business are too expensive. They get ideas. They get passionate, and that's a problem. In a tech firm, experienced devs who understand business end up at director level or higher and firms compete to pay them the best. In non tech firms, they are a problem and get pushed out. This is because the business people are scared of such devs because senior developers end up understanding the business better than the business people do. After all, they implemented the business logic so every rule, regulation and detail is in their mind. And they're used to the rigor demands of programming, so tend to say awkward things in meetings like "that won't work" or "that contradicts the other thing you just said". Tech firms don't mind this because that guy's boss is himself a former developer, and is used to such discussions (from e.g. code or design reviews). "Business people" on the other hand aren't used to this at all, yet feel like their value is their business understanding. They need their devs to be bored and uncaring drones because otherwise what's their own value? You don't want to be competing for a promotion against someone whose understanding of the business is better than yours and who can actually execute change projects effectively!

Underlying all this of course is the uncomfortable fact that programming is much harder than most office jobs. Programmers can and will learn programming and then go on to learn the fine details of finance, accounting or shipping without breaking a sweat, but the reverse is generally not true. It was maybe to some extent in the Visual Basic era but the move to web apps put a stop to gifted amateurs cobbling together business apps and nothing really replaced it (maybe Oracle APEX but it's not as widely used).