Why does PHRF-LO provide ratings for boats that are clearly not "off-shore" cruiser-racers?
PHRF-LO does not operate regattas nor does it dictate how they should be run.
The purpose of PHRF is to attempt to equitably rate sailboats of different sizes and designs (which has included some high performance one design boats and day sailors).
PHRF was originally never meant to be a system for "Grand Prix" racing (IOR, MORC IRC or one-design rules are better suited to this task).
PHRF was meant to provide an inexpensive and easily implementable system for clubs and local regions. Because the system has proven to be very effective, it has probably been extended beyond its originally conceived limitations.
Although PHRF does rate a wide variety of boats, it realizes that allowing boats of radically different sizes, shapes and or purposes to race together will probably result in less than satisfactory results. The closer the boats are in design and size the more likely any individual race will be fair from a handicapping standpoint.
Since PHRF does not run regattas it leaves the decision of fleet make-up to the race organizer. A club is well within its charter to set specific limits as to the specific boat types it will allow to race in any race or division. Furthermore, PHRF does not endorse racing spinnaker boats with non-spinnaker boats nor does it endorse racing displacement hulls against planing hulls but if an organization desires to do so, then they accept a much higher potential handicap error.