Given the wide range of tangible and intangible costs of being an unrealistic leader, why would leaders make a habit of this path?
Sometimes they are unaware. They think they're being realistic because their actions align with their beliefs. When their beliefs go unquestioned, they can be unrealistic and not know it. If our beliefs are firmly formed, it becomes less possible to even know when we're actually wrong, or right.
It can be the good fortune of success. Narcissistic leaders believe their expectations are the root cause of whatever success happens in their world. This is incentive to never question how realistic their beliefs are, reinforcing the delusion that if they see success their expectations by definition must be realistic,
When people they have power over passively succumb in compliance to their unrealistic expectations, they can inaccurately conclude that their expectations must be realistic because no one questions them.
Until they find out for themselves what are more realistic expectations, they will be unrealistic leaders. When they become even slightly curious about other perspectives, hope lives.