There was nowhere else to take the series after 3 anyways....
I'd agree with you if Silent Hill was simply a story about the Mason family...
... and please, bear with me, Alucard. Silent Hill has a tendency to get me into rambling mode.
The series, as shown by SH2, has a lot more potential for isolated, stand-alone stories than that. After Toyama left to join Sony Imamura wanted it to be a 'Twilight Zone' inspired anthology where the only connecting factor was really the town itself. It would allow them the freedom to make all sorts of stories dealing with all sorts of themes. Silent Hill 2 was the introduction to that idea, despite KCET corporate initially pushing for a more direct sequel to SH1.
Granted, it all comes down to the writing and direction. People like Imamura, Tsuboyama, Nakazawa, Sato, Ito, Owaku - they had it figured out. All of their input was abstract, but still grounded enough to make truly unique, horrific, and emotional stories. It wasn't just jump scares, or blood & guts, or disturbing imagery. There was something deeply lonely and uncomfortable about those early titles. They really rolled with the "a person's own imagination can be far more frightening than a monster" philosophy. That's a hard thing to pull off as a horror designer. It's why so many shit films and games
rely on jump scares and extreme imagery. It's a temporary emotional reaction as opposed to a longer, slower creeping fear that stays with you.
Homecoming and Downpour tried the whole separate story thing, but both lacked the nuance and restraint to make anything other than projects that felt like mediocre (or in some cases, downright terrible) fanfiction. Downpour had some ok ideas buried under the jank, but everything Silent Hill related after the disintegration of the teams at KCET seemed heavily weighed down by clowns like Hulett and Shatsky. Digging through interviews and quotes from these guys (thanks goes to Twin Perfect for doing most of the grunt work) pretty quickly shows just how out-of-touch they were.
Then again, Konami has pretty much ruined every one of their great series in the past decade, so yeah. Silent Hill was always on very delicate creative ground due to the strange dreamlike quality of the early narratives. I was actually surprised it got a second game at all. It's just unfortunate that the delicate aspect wasn't padded and nurtured. It's unfortunate that the technical magicians within Team Silent weren't lifted up onto a pedestal and recognized within the company further. Instead the series was shoved into a fucking meat grinder and left out in the sun to rot. Even Ito couldn't create a picture disgusting enough to accurately portray it.