The function of most recent is to have an ordering of games based on their publication date, instead of their popularity ranking.
That they do change the ordering by major update devlogs, instead of update date or publication date is a questionable pratice. But people are people and trying to game a system is just too easy, if you only need to update your game daily to appear on a list again on top. Or to change release / in development status repeatedly.
There are rankings like this. https://itch.io/games/year-2024
They could do a better system, like only allow an update to trigger this every two months or so. This way, developers updating their game woudl benefit from it, even if they do not publish a devlog. A devlog itself is already a promotion, since it appears in the devlog list.
I for one would prefer an update ranking with non-spammed updates, like I just described, to the so called most recent. Or "newest" as is internally called.
You might want to read my comments this way: yeah, it works mysteriously or not how some people expect it, but Itch does not care anyways, since they do tell people to not rely on it.