They're paying peanuts and he could help them get top four. Also, it's not like United can just unanimously decide where they want to sell him next season. If he decides he wants to go back to Dortmund then it'll probably be made to happen.
I remember when Southgate first used him in midfield and Klopp starting publicly criticising the move. Then a couple of years later started doing it himself.
Palmer has a lot more space to operate in than Foden does at City to be fair, he is also on penalty duty at Chelsea, which is where half of those goals come from.