It all comes down to demand I guess... Most people seem to like Beats headphones or think their Airpods have top quality sound and don't care that $200 headphones exist that blow them out of the water. Most people use bluetooth with low quality codecs that distort the sound. In addition, most people listen to their music on streaming services that compress the heck out of tracks that are already heavily (dynamic range) compressed. So it's a case of (a) people never having been exposed to "hi-fi" and (b) people ceasing to care/being willing to sacrifice audio quality (which is heavily subjective anyway) for convenience. So it is the same as phone cameras, people are willing to sacrifice image quality and control for the convenience of having a camera in their pocket all the time.

I personally care about audio to a reasonable degree, but I also think that AVRs in their current form are a weird mix of "too much" and "not enough". I wanted to have a 5.1.2 system that wasn't a soundbar with tiny, tinny speakers that bounce off the ceiling and a tiny sub that moves hardly any air. But in order to drive decent speakers you need a decent amp. But in order to get a decent amp you have to buy a unit that has a million connectors, spatial audio processing, etc. Out of the gigantic array of connectors on the back of my AVR, (7 HDMI ports, phono plugs, component, composite) I am currently using 3 HDMI ports because I play most media off an HTPC anyway. I feel like I'm using less than 30% of what it has to offer, and there is a growing divide between people who want convenience and people who want uncompromising quality at any cost, so low end AVRs aren't much better than a soundbar, and high end AVRs aren't affordable for the average consumer.