This is fantasy and naive. Tell me you've never run a project without telling me you've never run a project.
Hi! I've worked in software development for a hell of a long time now, nice to meet you!
Team capacity is something that the PM or whoever is managing that is always aware of. It's something that should be reviewed and adjusted every quarter. Or whenever there is significant changes to the team - such as layoff, or leads leaving.
Projects timelines are not determined in a vacuum. Spiderman 1 should be used as a baseline when determining timeline for Spiderman 2. You adjust from there based on time savings from tech and assets that carry over, and new tech assets that need to be created.
Here's the problem: Studio pitches a game, publisher says "2.5 years?" Studio says "no no no, around 4...maybe", publisher says "3 years it is"
That timeline/release date is then communicated to leadership. From there, 2 terrible things happen. 1, the games release, and revenue expected to be generated from that game is carved in fucking stone by people who really only cares about quarterly profits. Resource/funding is then allocated for 3 years. Not the 4 years that the game will actually take to make. Studios are then forced to work their employees ragged to meet a deadline that was unrealistic to begin with.
Sometimes, studios do bite off more than they can chew and things go over. In either case, working people so hard they have to sleep at work and don't get to go home and actually have a restful sleep, or go home and look after their newborn baby for a few hours so their spouse can sleep is not the solution.
Crunch, or forcing your staff to overwork - sometimes with no extra pay, is a sign or poor management and does not need to come back