Short and simple answer: Germany was really really good at playing up the idea that they had a technological and numerical edge over the French and BEF. They also used a number of deceptive practices to convince the Allies they had more forces on their Western Frontier than they actually did. This gave the French and the British pause on any major offensive actions in Western Europe, and they decided that maintaining a defense posture against an inevitable German offensive was the best strategy for the time being.

Longer answer: As I previously mentioned, the French and the British forces deployed in France during the Phoney War didn't do much. The plan that had been agreed upon by both parties several weeks into the war was to build up their forces and maintain defensive positions in Western Europe, utilize the Maginot Line (which brief sidenote: worked as expected contrary to popular belief) and await the eventual German offensive, which they believed the main thrust of which would most likely come through the Low Countries. Attempts were made to get the Belgian government to allow the Allies to move into their territory to give themselves even more breathing room against a German offensive, but the Belgians, fearing a German invasion if they granted this request, denied it.

Now the French did engage in the Saar Offensive four days after the start of the war, but this operation was half-hearted at best. Initially it called for up to 40 divisions of the French Army to push rapidly into Western Germany. 30 Divisions did end up coming up to the border areas, but only 11 actually crossed into Germany, and even then, they only advanced 5 miles at the furthest before the decision was made to halt the advance and to undertake defensive positions before withdrawing entirely.

French forces eventually withdrew back to their starting positions along the Maginot Line, and aside from German counter attacks against gains the French continued to hold onto, no major offensives took place on the part of the Allies until the end of the Phoney War. This was in large part due to the idea that Germany held an advantage in air and manpower on the Western front, and that any attempts to offensively engage with or neutralize it would come at a high cost. Years of Nazi propaganda as well as common deception methods (making a big show of moving around the forces you did have, radio transmissions in the open to ghost divisions, etc) helped to mask the hollow shell that was Germany's forces in Western Germany while operations in Poland took place (and while they recovered, the invasion of Poland took did take its toll on Germany's military) were mostly to thank for the Allies decision to dig in and wait.

The irony in all of this, is that Germany only had about 23 divisions at the ready to defend against any Allied offensive into Germany while operations in Poland continued to take place. The Luftwaffe also had significant shortages of aircraft in Western Germany at this time due to having the majority of its ground attack aircraft deployed for operations in Poland. Had the Allies known that they held a significant manpower and airpower advantage, it's still hard to say if they would have undertaken any major offensive operations against Germany. Though the opportunity to hamper if not defeat Germany was certainly there during the Phoney War.

If you're interested, I recently spoke at length about all of this on the AskHistorians Podcast. Check it out here!

Sources:

The Rise of Germany, 1939-1941 (The War in the West) by James Holland

Case Red: The Collapse of France by Robert Forczyk

Why the Allies Won by Richard Overy