I think this has more to do with the "down ticket" than with any hope of winning the presidency. (The concern here isn't the presidency; it's the Senate, where the Dems are absolutely desperate to get a handle on the judicial appointments (in particular, the next SCOTUS appointment) being made by Trump and moved forward by McConnell.)
I think if a "crazy" wins the nomination, the party knows that many moderate Dems will stay home and they lose their chances to take control of the Senate. They will gladly toss away a shot at the presidency (because it was always going to be a long shot anyway) for the sake of gaining control of the Senate.
I agree. What we want is for Dem voters to be disenfranchised and not vote at all.