It seems this is likely a result of the 2019 FTC Consent Order on Facebook [1]. Facebook has had to implement privacy processes which are monitored by a 3rd party who reports to a judge and facial recognition was one of the issues sparking the order.

The consent agreement [2] has whole sections and rules specifically for facial recognition data.

Likely a review program and criteria (approved by the monitor) were set up based on these rules, and when the tagging feature was pushed through this review it failed. Rather than risk the judge sanctioning them for failing to meet the order, they decided shut down the feature.

[1] https://www.ftc.gov/news-events/press-releases/2019/07/ftc-i...

[2] https://www.ftc.gov/system/files/documents/cases/c4365facebo...