This is not a historical explanation but a a ELI5 on PlainOldTelephoneSystem

The anlogue tepelhone system was cheap, simple and reliable.

A telephone connection used to make a direct wire connection between both end devices. You might know the pictures of the telephone ladies with dozens of plugs and wires in front of them. You'd call them, say who you want to be connected to and they'd plug a wire from your socket to the socket of the person you'd want to call.

With the invention of telephone numbers this process could be automated. If you picked up the handset, you would close a circuit and the telephone router would put a dial tone on the line. When you dial a number on a rotary phone, the number is represented as circuit breaks on the line, which trigger an electromechanic device in the router that does the same thing the telephone lady used to do - connect your line to the line of the person you tried to call. The telephones itself were really dumb devices, all the "intelligence" is in the network/routers, which can be maintained centrally. But it also means area codes have a meaning, they trigger a connection from your phone to the router of the other town. So in theory telephone companies should know exactly where a line goes to. Mobile phones need to register with a cell who communicates the information to the network (more or less central servers). So the routing is far more advanced than for plain old telephone system

The disadvantage of this system is obvious, if 100 people want to call from NY to LA there need to be 100 lines going from NY to LA. But you'd have a dedicated medium (a copper wire) for each call and didn't have to care about interference, security (encryption wasn't really practical back then) or expensive user devices.

Out current mobile system is only possible, because all the data is digitalized and compressed. using the same frequency for several (hundred) phones need sophisticated frequency sharing algorithms which were not possible to implement efficiently with analogue parts.

So it's really technical reasons (mangled of course with economic viability of the solutions)