I can sympathize with Rosencrantz’s position here. When The Prince of a Country is denigrating his homeland, you cannot possibly agree with him, lest you insult him. The country and its royalty are often so intrinsically linked that a king can get called his country. You could say, “Oh there’s old Sweden over there talking to Vietnam.” It even happens in this play that the king of Norway gets called Old Norway.
So you don’t want to put down a Prince’s country even if he wants you to.
On the other hand, you generally don’t want to disagree with royalty either. If a prince says, “These figs are delicious,“ it’s best to nod enthusiastically and agree. “Yes, yes, very delicious.” Even if you find figs sickly sweet.
So what can Rosencrantz say here?
He can’t say, “Oh yes, I see what you mean. You’re right, Denmark does seem to be a bit of a hell hole.”
And he can’t deny it and say, “You’re crazy. Denmark’s the most beautiful place ever.”
So he does the only thing he can do in this tight spot and just speak for his point of view. Well, his and Guildenstern’s.