Why do chemistry and physics have different sign convention in thermodynamics?
This is not a simple physics versus chemistry distinction. I taught Physics for 25 years and saw many examples of either usage in multiple textbooks. In fact, at some point in my tenure, the AP Physics committee swapped conventions on the equation sheet for the AP Exam.

Just my take here: I've always attributed the work-done-by-the-system camp as being more prone to be used by engineering types who want to know "what the system can do for us" in practical applications. On the other hand, work-done-on-the-system seems to foster the view of an experimenter or theoretician operating on a system from without.