WITH_GMS = true is an internal LineageOS build-time variable which means more than simply "Google services are part of this build". According to LineageOS devs in #lineageos-dev:

<LuK1337> and WITH_GMS is mostly meant to be used by those who know what it's doing
<timschumi> whoever builds with WITH_GMS presumably also bakes in all the other modifications that they need

Internally, LineageOS treats WITH_GMS as implying that the user will never install any further addons, and therefore will not reserve any extra space in the relevant system partitions when it is set.

• https://github.com/search?q=org%3ALineageOS+WITH_GMS&type=code
• https://github.com/LineageOS/android_device_oneplus_sm8250-common/blame/lineage-19.1/BoardConfigCommon.mk#L132
• https://github.com/LineageOS/android_device_oneplus_kebab/blame/lineage-19.1/BoardConfig.mk#L24

Because MicroG is built with it set, system partitions have no extra space in them, meaning that addons that need to modify /system fail to do so, resulting in bugs like topjohnwu/Magisk#3820 (comment) and arovlad/bromite-webview-overlay#5.

There is no benefit to setting WITH_GMS from MicroG's perspective; LineageOS official builds do not set it, and GApps addons such as MindTheGapps/OpenGApps do not "switch it on" after being installed, as it is a build-time variable only and is invisible at runtime.

<infinity0> at runtime, i suppose there is no way to directly distinguish if the build was done with WITH_GMS or not, so it doesn't matter from a runtime perspective?
<LuK1337> no

Therefore, please stop building your LineageOS+MicroG images with WITH_GMS, and stop recommending this practice in this repo's documentation, as it prevents addon installers from working with no actual benefit in return.