I mean there’s nothing necessarily “wrong” with it per se. As you said family businesses are a thing and there’s nothing necessarily wrong with those.

I believe what people have issue with is when people who were a product of nepotism or got where there are because they were in a family business act like they did it all on their own or were somehow better than others etc.

Using the term “nepo baby” is calling out those people. It’s like saying “no you didn’t get to where you are because you’re so much better than other qualified people, you just had help from your family.”