No OP, it's not illegal.
This is the only forum I'm on where if you don't have a WD or sway or both people think your going to end up in a flaming mess at the bottom of a canyon somewhere.
Towed for almost 40 years and sometimes I had a WD, sometimes not. About 20% of the time with a half ton and 80% with a 3/4 ton. Both my TT and race car trailer weighed around 6K. Never a problem with either. The TT had both and the race car trailer had neither.
In fact, my race car trailer without WD or SC towed a bit better than my TT with WD and SC. The reason was I could get the weight just where I wanted it so the set up was perfect.
In reality OP, the trailer you saw "could" tow better than your trailer with WD just by setup happenstance just like my race car trailer tows better than my TT with all the bells and whistles.
I do know this. "I" would much rather tow a trailer without a WD and SC with 14 to 15% tongue weight than a trailer with that stuff and 10% TW. And I would be a whole bunch safer too. YMMV.