Of course the decision was made back in the Firefox 5 days, but back then Chrome was rapidly growing, mostly at the cost of Firefox. Had Firefox remained embeddable, I think it would've only been held back in important performance areas like threading and rendering because of the API around the web view.
Interesting enough, with the Firefox for Android rewrite, Mozilla actually went back to making Gecko embeddable: https://wiki.mozilla.org/Mobile/GeckoView This design decision is also claimed to be the reason for them to disable about:config in production builds, because misconfiguring geckoview can disconnect it from the app and leave users with a broken browser (apparently).
So now there is an official way of embedding Gecko in your application, but it's limited to Android only.