They want to see that you’ve challenged yourself to the fullest extent possible given your specific circumstances and have been successful with that challenge. It is often easier to show that you’ve taken the most challenging schedule possible at an average public school than it is at an elite boarding school (which may have three times the AP offerings and a boatload of other students taking them and earning As).

If Applicant A and Applicant B have identical scores, scheduled and grades and A went to Horace Mann and B went to Central High, it is not unusual for the admissions reaction to be:

“Wow B - you did all that at Central High?” vs. “You went to Horace Mann A - you could have done more with the opportunities available to you.”

Whether or not it is ultimately the best preparation for succeeding in college, being the absolute biggest fish possible in a small pond typically results in more success than being a big (but not the biggest) fish in a gigantic pond from a purely admissions standpoint.

UGA doesn’t advertise how many students from rigorous high schools who graduated with a 3.38 (while competing with other high achievers) were admitted. They choose to focus on GPA. I’m hearing more and more parents say that the challenging route (and often the associated cost) isn’t worth it. On top of that, the very popular state HOPE scholarship program is driven by GPA. More and more parents/students are opting for example #2.