why does the command chmod 0775 not remove setgid

This behavior is documented for the GNU implementation of chmod - and has apparently been replicated (although not similarly documented) in the newer uutils implementation.

From man gnuchmod:

   For directories chmod preserves set-user-ID and set-group-ID bits unless
   you explicitly specify otherwise.  You can set or clear  the  bits  with
   symbolic  modes  like  u+s and g-s.  To clear these bits for directories
   with a numeric mode requires an  additional  leading  zero  like  00755,
   leading minus like -6000, or leading equals like =755.

So for example

$ ls -ld dir1
drwxrwxr-x 3 steeldriver steeldriver 4096 May  2 17:24 dir1

$ chmod --version
chmod (uutils coreutils) 0.8.0

$ chmod --verbose 2775 dir1
mode of 'dir1' changed from 0775 (rwxrwxr-x) to 2775 (rwxrwsr-x)
$ chmod --verbose 0775 dir1
mode of 'dir1' retained as 2775 (rwxrwsr-x)

but

$ chmod --verbose 00775 dir1
mode of 'dir1' changed from 2775 (rwxrwsr-x) to 0775 (rwxrwxr-x)

See also Permissions remain 2700 after chmod 0700.