Good catch from the poorly lit / grainy photo!
While not being an electrician, even I can see how it could be an issue during installation, or if in a location where vibration / movement would cause the cable to rub against the cutout after installation.
But I'm wondering how often that really is an issue in a garage? Does the vibration from a garage door opening/closing provide enough gentle sawing on the cable sheath over a number of years to gnaw away to the bare wire? Unless the cable is taught enough to be firmly against the cutting edge of the cutout, this seems more like a broad rule to cover a narrow issue. Which I guess is what you want from a government / insurance perspective. Not so much from the DIY view.*
*Note that the majority of the DIY electrical work in our house was done while building out our basement and was reviewed by a licensed electrician.
There are many reasons for this particular code. Keep in mind that there is expansion/contraction from heat as well. Can be heat generated in the wiring itself or changes in ambient temperature over time (common in a garage). Combine that with any number of things that can cause the wire to move/vibrate and eventually you'll end up with a short.
There were actually a couple of DIY wires done like this in the house I'm currently in. (Long story short repair costs to bring it up to code deducted from the buy price as well as the cost of a more comprehensive electrical inspection once this was noticed.) When I removed them when I relocated my branch circuits in phase 1 of my solar project one of them was already nearly completely compromised with a slice through it through the outside jacket and part way through the hot wire. And this was a lighting circuit with maybe 8A worth of lights on it, not a 50A circuit...
Definitely a pretty simple code to stick to, also.