They wouldnt do that because a gold sink is still nesseccary for an in-game economy. If they make player created repair kits the money goes through-out the player base and inflation happens faster.
Another point. There would be no cost for dying. If they make the cost-to-craft rate reasonable, then you would get what you need (money to buy/materials to craft your own) while you are faffing about. If they make it really expensive then people wouldn’t buy or craft their own and instead just repair simply at an NPC for a set price.
In reguards to a statement of “realism” I have no suggestion to make. Yes, it does seem wierd that a master of armorsmithing goes to some country bumpkin to repair his intricate armor.