Why is this even news?! I don't know about USA but in India you can store licenses, vehicle ID cards, school certificates, insurance and hundreds of other state or federal issued documents in an app -Digilocker for years now.
I believe Utah is the only US state where you can carry your ID digitally on your phone and use it to buy alcohol or give it to police during a traffic stop. If California moves in that direction, it will be a big deal; soon we could leave home with just our phone without any analog cards.
For those who don't know, Digilocker is a govt initiative.
Also, it is opt-in and not mandatory. If you don't want to use it then don't bother. Nobody will force you to install the app or attach it with any of your docs.