It was multitouch. As soon as multitouch handheld devices happened, and we no longer had physical keys (even to dial a phone number), and UI design all around started shifting towards convergent touch-oriented interfaces hence CSD and all this nightmarish hellscape nonsense, that was the beginning of the end.
The saddest part is that CSD isn't even *always* bad. There are specific situations where it's even helpful. But decimating desktop metaphor (because phones!) was a mistake.