Because they did disappear overnight. Microsoft changed their licensing so that screens had to be under 10.1" to get reduced pricing with Windows 7. By this time, netbooks had already creeped into the 11" size range.

The second thing that caused them to die out was increased memory requirements. The chipset used in the majority of netbooks topped out at a single 2GB dimm. With bloated apps like Chrome and Electron, the systems became practically unusable.