tl;dr- Windows is acting as a password manager, and like all password managers, it must remember the passwords it manages. You're probably thinking of the thing where servers are supposed to store hashes instead of passwords; that strategy doesn't apply here.
@forest's answer demonstrates a major caveat – that, if we assume a wireless network will always use a specific protocol that starts by hashing the password, e.g. WPA2, then Windows could forget the original password in favor of the protocol-specific hash.
Why is it that Windows would store credentials in a reversible format? Why is it not just storing the hash of the password that it sends access points to complete the handshake and establish connection?
Windows is serving two different roles here:
Windows can remember network passwords for you. When it does this, it's acting as a password manager. Like any other password manager, it must store the passwords it manages.
Windows must convince the WiFi network that it knows your password. To do this, it must know your password.
If you're concerned about Windows storing your password, it'd seem like you can just stop using its password management function. However, you'll still need to supply Windows with a network password in order to log into a network, much like you must supply an email portal with your email password to log in.
Note: The advice you're thinking of applies to servers, not clients.
You're probably thinking of the thing where a server shouldn't remember plaintext passwords, but rather a hash of them. That doesn't apply here since Windows isn't the server.
You can hash the WiFi password if you like, but then the hashed password would be the new password. This'd basically be the same thing as using a key-derivation function to generate your WiFi password.
Exception: Protocol-specific hashes can be retained.
The above answer is written for a general-case protocol.
However, specific protocols may call for having the password hashed, such as in the popular wireless protocol, WPA2. If we assume that the network will always use a specific protocol like WPA2 across all access points and time, then we can forget the original password if we just retain that hash.
The issue with retaining just the hash is that it's not the network password so much as the protocol-specific network password. This is, a client that retains just the hash under one protocol would break if the network updated to WPA3, or if they went in range of an older WPA access point, etc..