I believe that there are two reasons: first, there was simply a different desired aesthetic at that time. Western music was delving further and further into harmony, but the introduction of rhythm as a central source of musical information came slowly in waves as globalism brought us into more and more contact with musics from other parts of the world.
Second, there was a different notion of where the primary semantic information should come from. The musical themes themselves and how they were manipulated and transformed was meant to impart virtually all of the semantic meaning behind the work. Opera and lieder and such existed, but even in these cases, the music was still considered to be at least coequal with the lyrics in terms of imparting meaning. And the huge amount of purely instrumental music simply could not have communicated what it needed to in such constrictive harmonic environments as we find in much popular music today.
I would not think of this as a loss, necessarily. We still have that older music, and we still make new, harmonically complex music. But we have an unimaginable number of sound sources and cultural sources to choose from, and we have opened up the semantic flood gates. The most important information can come from anywhere: the staging, the harmony, the lyrics, the dynamics, the electronic distortions...
Don't fool yourself into thinking that all of modern music is what you hear on the radio. Today, we create everything that we can imagine.