I just found another possible reason. I think that LED is usually used as a TX indicator by the default AT firmware (it flashes whenever there's data being sent).
Apparently, TX is set to high by default. If the LED were connected with TX and ground, that means the LED would be on all while the chip is inactive, which would be horrible in terms of power consumption because you're just using power even when there's nothing being done.
So in this case, the LED is wired to VCC which means no voltage potential between the two. Then when TX goes low (e.g. the mcu starts transmitting data), the LED turns off. It blinks of course because the TX pin goes low and high alternately, but at the end of a transmission it defaults to high again, and the LED remains off.
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