They specifically choose states close to the West Coast because the climates do not have serious weather or rain. Nevada, California, Arizona etc. SF is a weird city compared to other places with hills and odd obstructions so a lot of them moved to Phoenix for testing. From an outsider, the regulatory environment in Arizona appears to be easier for companies that want to do this type of testing as opposed to highly regulated California.
You're moving the goal posts. The Chandler Waymo service is entirely driverless and not on a fixed route, with expanded service coming next year and additional cities opening up in 2022-2023. I encourage you to read up on Waymo's progress - it's quite a bit farther along than most people think.
