Just a small gif (as png didn't exist/widely supported) that had the rounded corner. Then if someone wanted to change the color or background you would have to redo all the images. Fun fun.
I am blisteringly angry about CSS in general AND THIS FUCKING ISSUE IN PARTICULAR since 2005 at the very latest. Likely enough to up the average for several thousand people with only mild dislike for CSS.
If CSS had a church I would burn it down. In minecraft of course.
I would say because a) there are zero alternatives, and b) it's pretty powerful; you can generally do pretty much any layout even if it requires hacks, c) switching to something else is clearly infeasible so it's not worth even asking for.