As there are different ways to hit a ball there's also different ways to throw a ball. If the ball can be hit and is well within the swinging range of the batter and they don't swing, then they're basically letting a good ball go, so they get called out on it as a strike.
Of course, if the pitcher were to throw a ball, let's say, too close near batter's hands or arms causing the batter to real back and avoid being hit, then the pitcher would be called on having a bad throw. And if the pitcher messes up 3 times, then the batter gets a free walk to 1st base.
Otherwise, yeah, batters would just not swing until they got the ball they want, but nobody wants to sit and watch someone not swing a bat for hours.
As for the ball being on the line of out of bounds, the field shape is quite simple. Imagine a square and you're batting at one of the corners. The lines adjacent to your corner are your boundaries that you have to hit the ball within, so if you hit the ball behind you or too far to the left or right behind the lines, then it's out of bounds. Nobody picked up the ball in this episode most likely because they wanted it to be judged on being playable or out of bounds.
But that ending play. Standing that close to a batter... Glad it was Karma and not me.