An operating system gives each program the illusion of having the whole machine to itself. Why is that illusion worth the overhead of maintaining it?

D. Because a program need not know what else runs or where its memory sits.

Without the abstraction every program would need to know what else was running and which physical addresses were free, and one stray write would corrupt any other. The overhead is genuine — page walks, TLB misses, context switches — and specialised systems give it up: HFT pins cores and bypasses the kernel's network stack. Worth its price in general, not universally.