I don't have any inside knowledge, but I believe it was a mix of wanting to simplify things for users, and to keep users within their system.
I suspect that the rise of imgur as it's own community was seen as a threat, or at least competition, and the question "why are we basically helping our competitors" was asked at least once.
That was my impression from having lived through it as well. Imgur built it's own little community and figured they could make a go of it on their own instead of being purely a reddit image host. They still do host a fair amount of content but gone are the days when you could got to imgur.com/r/aww and see all the cute animal pics because imgur was the default host of all of reddit so they had the integration to show subreddit specific albums.
I suspect that the rise of imgur as it's own community was seen as a threat, or at least competition, and the question "why are we basically helping our competitors" was asked at least once.