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Midsommer was using the atmosphere to scare you, the body horror just added towards that in a few scenes. 
I think it’s a useful tool for horror movies to use if it’s done tastefully and has the right context. I mean horror is meant to scare and unnerve you, why wouldn’t you utilize something that gives the user such a primal response.
David Cronenburg's the fly and John Carpenter's the thing have body horror as a main component, they also have a really good story to go long with it. 
Same goes for Junji Ito's horror manga Uzumaki, along with various other works of his. 
Different people are more sensitive to different aspects of horror. For instance, I've never found ghost movies particularly scary. 
In my opinion horror doesn't get much more lazy than paranormal activity, but I'm not going to dismiss the entire subgenre just because of that. Especially when there are movies like the exorcist out there.
I think that some of the "appeal" of body horror is the fear of physical pain and the loss of physical functions, the thought of trying to live and survive with permanent damage done to your body that can't be undone.
The main reason that people watch horror is out of morbid curiosity, different people are more curious about different things is all.
Actually re-reading the post, what op is describing sounds more specifically like the "gore" subgenre rather than general body horror. >


In my opinion horror doesn't get much more lazy than paranormal activity

You mean you don't get scared when a cross flies across the room accompanied by a loud noise?