Because those were community servers often built around community. There weren't a lot of them either.

If admins allow cheating - people that want to play would leave the server

If live in a non-metro area, you probably have a handful of server your latency allows you to play on - getting banned would be a big suck

Now you just click "play game" and you get match with some strangers you might never play ever again with. Financially, those privately hosted servers no longer make economical sense for game publishers.