Why does it only work on neutral monsters?

Because it's an item specifically made for jungling.

i was kinda wondering the same thing why not make it work on minions as well it'd help with last hitting and some people would find a use for the 3 end game items

Because if it worked on lane monsters, EVERYONE would get it. Why?

Machete upgrades into a relatively cheap defensive/offensive item that provides absurd sustain in lane.
Wriggle's for Armor/AD/Life Steal/Unique passive

Spirit stone(The new Philostone essentially for junglers), which provides much regen, and upgrades into a fantastic mid-late game item.

Plus can you imagine the pushing power on some champions if this were allowed? My god.

The real question is, does it work w/ smite?