There are a couple of reasons that the legacy scaling model was viable for us. As mentioned in the post, only 1/10 of our traffic was from the API, which gave us a roundabout way to scale by diverting resources. And it's only viable to use this model of scaling when the business value of a request is high – we were originally quite happy to spin up more containers when we reached our scaling limit. That's the pragmatic reason why we were processing one request per container.
In terms of what issues caused us to move away from parallelism in the first place, it was all the CPU-bound stuff that you might expect: ReDoS-style issues, post-processing arrays in very large edge cases, programmer error, etc.