Rates follow a kinked curve: gentle increases up to an optimal level, often 80%, then a steep climb designed to make borrowing painful and depositing attractive so the pool refills.
At 100% utilisation the pool is empty of free liquidity and no one can withdraw until a borrower repays or is liquidated. This has happened repeatedly, and it is the reason a deposit earning an eye-catching rate may be temporarily immobile at exactly the moment you want it back.
High utilisation is therefore two signals at once: strong demand for leverage, and fragility. Checking it before depositing tells you something the advertised APY does not, which is whether the exit is open.
Related: lending-protocol, borrow-apr, tvl, withdrawal-freeze