I would be very interested to hear more on this topic, too — I always assumed this is because most 3rd party providers deliberately chose not to integrate with the file provider APIs in full (due to security considerations, complexity or something else). This is based on the fact that some providers seem to work, e.g. Secure ShellFish app.
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@jadardev Choosing to not implement some of the Apple's file provider APIs is my guess, although I could be wrong. By the way, Secure ShellFish developer has a very helpful GitHub repo with code examples on how to integrate with file providers: https://github.com/palmin/open-in-place