- First and foremost a Google tool, not a tool meant for the masses, per se[0]. It could do great things, but it had the dependency on closure tools, which were not the easiest to use outside of Google (did anyone outside google actually use the `goog.*` stuff?) and writing annotation files (externs) of libraries and such never caught on and weren't shared in some meaningful way.
- Lacked evangelism. I imagine this had to do with the above. There weren't people from Google singing the benefits loud and proud everywhere about using the Closure Compiler
- Docs weren't the best. Some parts are still broken (links and such).
- It didn't evolve. Closure could have been a pretty great bundler too, actually, but it didn't support ESM for a long time and it was never clear how to get it bundle things even when it did, I think you mostly had to declare each dependency file for it to work correctly, but I never myself got it to work 100%
These are some of the things that I think ended up holding it back. It could have been a cool little ecosystem too. There was a sister project called Closure Stylesheets that was for CSS that was supposedly very good as well, though I think thats no longer maintained. I believe it was very similar to how people use PostCSS in terms of what it did
[0]: Lots of projects use it to minify their JS but never really took advantage of the advanced functionality it can provide on top.