Reddit gave Imgur an almost impossibly wide berth compared to other "made for Reddit" sites and allowed the owner to get away with all kinds of site policy violations. Imgur also set up various restrictions on content that were conveniently waived for Reddit images.
It turns out it was because Reddit took an investment stake in the service and didn't make it known for a long while.
Then Imgur decided to just become Reddit because, hey after all, they're responsible for some huge percentage of all traffic for the site -- this being entirely contrary to the communication the site put out about what they were and were going to be doing.
Now Reddit is just wholesale replacing it with an internal service -- which is what should have happened in the first place. It's been obvious for years that this should have been a core service, but the terrible previous management of the place had pretty much frozen all improvements to the site.
I think this move speaks more to the sane new management team doing the correct things than anything else. I'm really happy with the job that Steve Huffman et al are doing with the site, the decisions seem reasonable, well intentioned and generally in a good direction.