The wearing of wigs in Congress would have followed the fashion of wearing wigs for gentlemen in America in general. Some men may have been a bit more conservative or older in their styles (or had need of false hair) and retained them for longer. Others like Thomas Jefferson rarely, or in the case of George Washington never, wore wigs to begin with.

The fashion for men wearing wigs drops off severely during the 1780s. It was waning before that, but once in the 1790s it's a rather antiquated look. It was never as much in fashion with women, most choosing to style their own hair with aid of cushions and hairpieces, though hair loss was a common enough issue that many still would have need of a full wig. And yes, those crazy huge and elaborate hairstyles are done without much difficulty to someones real hair.

As for the powdered portion, that was part of the hair care and styling system for both wigs and natural hair. Pomade and powder act as a sort of leave in conditioner and dry shampoo. It helps with cleanliness as well as making it very easy to style the hair (it's much fuller as well). Powdering lessens in the 1790s and the glossier look you find in portraiture from the early 19th century comes from the continued use of pomade.

As for why this fashion changed, it basically comes down to the fact that fashion changes constantly. By the 1790s culture is heavily influenced by the classical period and Greek and Roman inspired clothing, hair, buildings, furniture, etc. are everywhere. Hairstyles change to reflect this and the shorter cut hair for men becomes much more fashionable.

As a follow up, why did wearing (powdered) wigs go out of fashion, more generally?