My theory is that Adobe lost the ability to generate licenses -- those product activating serial numbers -- for old versions of software, so they just made it all free.
How could they lose the ability to create licenses? I can think of many scenarios: The one server that ran the legacy license code crashed, and they had no backups. Or they lost the database of who had which product and serial number, so there was no way to verify anything when someone needed to reactivite an old product or move their license to a different system. Or there was a new bug or incompatibility in their license generator, perhaps due to a server upgrade, but the source code for the licensing software was lost so there was no way to rebuild it.
By the way, they released a lot of products for free, not just Photoshop (see userbinator's link above), and most of them still run just fine on Windows up to Windows 7. The Mac serial numbers are much less useful since they were all for PowerPC versions if I recall correctly, so they won't work on any recent Mac.