So, a few things to unpack.
First, Fangraphs is
projecting the Red Sox to win the division right now, and thinks the Red Sox have a better crack at winning the world series. They expect the Red Sox to win at a .588 clip the rest of the way, against a strength of schedule of .505. New York, on the other hand, is expected to win at a .613 clip against a strength of schedule of .485. That difference in SoS over each team's remaining games would cost the Red Sox 0.33 wins and gift the Yankees 1.04 wins, both a non-neglegible difference in a close division race and well within the margin of error for these systems.
Helpfully, Fangraphs also has a
different page where they show rest of season projections
without accounting for strength of schedule, and things look a whole hell of a lot closer: .593 for the Red Sox, .598 for the Yankees. That is a trivial difference.
Looking at the player projections for each team in more detail, Fangraphs thinks the Red Sox have a slight edge in position player talent (WAR/650 PAs of 3.29 vs 3.23) and starting pitching (WAR/200 IP of 3.15 vs 3.07) but gives the Yankees a larger edge in relief pitching (WAR/200 IP of 1.75 vs 2.85). This is pretty understandable: Kimbrel vs Chapman is certainly a tight race, but Robertson, Betances, and Green have notably longer and better track records than Barnes, Kelly, and Hembree, and things just get more lopsided further down the list.
It is also worth noting that the Red Sox have benefited from sequencing more than the Yankees have. Looking at the Fangraphs
Base Runs standings, the Yankees have outperformed their Base Runs record by one game, the Red Sox have outperformed theirs by five. There are ways to explain differences like that, but historically teams with large differences tend to regress towards their "expected" performance, and projection systems are implicitly aware of this.
Projections systems are a "science", in that they take an objective look at a large dataset of past events and draw inferences from them in order to better understand why things happen and what will likely happen in the future. Like more "serious" scientific projects, they are continuously tweaked and reevaluated, resulting in incremental improvements. What we have now is better than what we had five years ago, and what we have five years from now will be better than this.
Projections systems are not an
exact science, and never claim to be. It's very easy to find situations where they were wrong. A far harder task is to find something that consistently does a better job at predicting the future than these projections do, and that is where they show their value.
Currently, these projections are not taking Statcast data into account, so they will probably be a little pessimistic about Betts, Moreland, Bradley, and others who we can see have made adjustments and are crushing the ball. They also aren't accounting for the Yankees lack of off days, which you brought up and is definitely a factor. There are no doubt other specific areas where the projection systems we have now are going to be systemically lacking. Those are things that should be brought up and adjusted for, not raised as an excuse to throw out the whole system.