what you are missing
1. DPS does not calculate reload times into account; reload times of frags are quite big.
2. DPS does not calculate APV (armour penetration value) into account, frags have a comparable low one, making it the wrong weapon to hit above their size.
3. DPS does not calculate into account, how often or - in case of frags - how much of your shot hit the target. on my 3 frag courier i for exampel need longer to kill small hitbox ships like an eagle than AspEs.
4. DPS doesn't take ammo into account, the total available damage from a fully loaded MC is higher than that of a frag. with an all frag loadout, you need to rearm often.
5. DPS does not take into account, how one weapon is fitting to others ... my experience with frags is, that they work best in all frag loadouts, or at least all-close-range loadouts... while a MC is petty much a nice overall duty weapon.
that said, frags are awesome, and need different piloting! my all frag speed courier is the most fun combat ship i own, and of all of my small ships the loadout which takes down enemies the fastest, making it great for USS bountyhunting.