The addition of simple syrup or agave nectar in Margaritas is often done because people expect tequila to be sweeter. And people do not like tartness (which was more common back in the late 19th/early 20th centuries).
I know that Dale Degroff promotes the addition of simple/agave nectar for this reason (in addition to less citrus than orange liqueur) and taught it that way in BarSmarts. I also know that some places like Eastern Standard serve two different Margaritas depending on who is asking and when -- one is sweet and served on the rocks in a pint glass and the other is served more balanced in a cocktail glass in classic style.
The sugar does overcome the tartness and the flavor of tequila which many people do not care for. Unfortunately, that sells the people who love the taste of the spirit and don't want diabetes a bit short.