On the other hand, functional app returning http errors clouds your observability and can hide real errors. It's not always ideal for the client either. 404 specifically is bad. Do I have a wrong id, wrong address, is it actually 401/403, or is it just returned by something along the way? Code alone tells you nothing, might as well return 200 for a valid request that was correctly processed.

(devil's advocate, I use http codes :))