As part of installing it, they need to add all the privileged permissions and whitelisting in order for it to work properly. They make an attempt to do it. It's not meant to be any less trusted. Play services is only designed to run as a privileged app with a ton of power.
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In my opinion, the ideal solution to all of this is for governments to require that Google makes Play services available as a regular app functioning without privileged permissions. Most of all the functionality could work. Backups, etc. wouldn't and it'd have more UX friction.
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No automatic app updates, needing to prompt users to install or remove apps, needing to ask for a battery optimization exception, needing to run a foreground service, etc. Of course, every service provider has all these restrictions unless an OEM bundles their stuff in the OS.
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I don't think it's a good situation for operating systems to be bundling a bunch of apps and services especially in a way that privileges them above other services. It's inherently anti-competitive, even if it wasn't Apple or Google doing it with their own OS.
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It's similarly anti-competitive when Facebook pays to get their apps/services bundled into the OS made by an OEM particularly if they get them to make them special integration / APIs not available to other services. Dislike it even with small apps / services.
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For stuff like backups, it should really just be designed to be service provider agnostic by using the Storage Access Framework, etc. to support arbitrary sync services. AOSP could just provide something like the Seedvault service we ship and let you use any service with that.
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I'd personally find it ideal if people could just install Play services as a regular unprivileged app. They could install it in only a certain profile, etc. It would make devices without Play much more viable, making them more common, and then getting more support from app devs.
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As is, it's required to either be Apple or to license Play services to make a mainstream device. Licensing Play services throws away your ability to make an AOSP-based OS not conforming to the CTS/CDD rules so you can't innovate on privacy, security, etc. like we do. It's BS.
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An OEM that has a partnership with Google can't ship a device with GrapheneOS because we deliberately don't respect the CDD/CTS when it doesn't make sense, such as our added Network permission toggle, Sensors permission toggle and other changes for privacy/security enhancements.
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Google shouldn't be able to set these rules on what companies can do based on them licensing their services. It's super anti-competitive, and so is requiring deeply building in their services to the OS with a high level of privileges + shipping their builds of core OS components.
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AOSP is great and the issue of the user-facing AOSP apps not being actively maintained is super overstated / exaggerated. It's a non-issue. The real issue is the combination of the anti-competitive licensing for Play combined with apps deciding to have hard dependencies on it.
There are many apps that will run only on devices w/ Google Play, probably even which have Google Play built-in. These include 2FA government authentication apps, anonymous COVID-19 tracking, banking, etc. Google Play therefore provides a reasonably trustworthy space for them.