It's from a time when the media was so small there was no need to categorize anything because the entire directory listing fit on a single screen in most cases.
Stuff ended up being characterized by what disk it was on (floppy labeled "homework" vs. "games") rather than where it was in a filesystem. Directories were only necessary once Hard Drives appeared and you could centralize your storage.
And now we're kind of coming out the other side, where storage is so large and can contain so many items that organizing it all into a hierarchical structure is a full time job in itself.
MP3s can mostly sort themselves, but your pictures ... and then you have the N-layer-deep "old computer" directories, where you copied all the files from your last computer to your new computer.
These days every desktop environment integrates an increasingly featureful fast search feature front and center because they know you aren't going to be able to keep up.
Stuff ended up being characterized by what disk it was on (floppy labeled "homework" vs. "games") rather than where it was in a filesystem. Directories were only necessary once Hard Drives appeared and you could centralize your storage.