First, a note on terminology. "Damascus steel" is used today with two main meanings: folded/layered steels displaying a visible pattern, and traditional-style crucible steels such as wootz, pulad, and bulat. The traditional use of the term is for both folded/layered/pattern-welded steels and crucible steels to be called "damascus" if they display a "watered" pattern (like watered silk) - "watered steel" is a fair translation of "damascus steel". Crucible steels that didn't show a pattern weren't "damascus". In the context of your question, I'll assume you mean traditional crucible steels in general.

Were they widespread?

Yes. They were certainly being made by the 4th century AD, and probably earlier. They continued to be made into the 18th, 19th, and even the 20th century, until regional traditional steel industries were outcompeted by modern industrial steel (whether imported or locally-made). Crucible steels were made across much of Asia, with India, Sri Lanka, and Central Asia (especially parts of Turkmenistan and Uzbekistan) being major producers and exported. It is probable that crucible steels were also made in China as early as the Han Dynasty, and were certainly made later.

Crucible steels were also exported, to the Mediterranean area and Japan.

Were they produced en masse?

Yes, Indian and Central Asian production was on an industrial scale, and was exported.

Crucible steels saw wide use - they weren't just for sword blades. Other applications in arms and armour included armour, sword hilts, and gun barrels. A great variety of steel objects were made with crucible steels in India and Central Asia, up to and including steel strings for musical instruments.

I mean, if it was that much powerful, why it wasn't produced en masse and replaced steel?

Crucible steels weren't super-materials.

• In China, decarburising cast iron was the dominant steel-making method since the Han Dynasty, replacing bloomery steels and possibly crucible steels. This dominance continued in later times, even while crucible steels were being made in China.

• In Japan, imported Indian crucible steel was available, and was used, but was not considered to be a "super steel".

• In India, European sword blades were imported in large numbers, and were used in large numbers. They were often considered to be of good quality, even compared with crucible steel swords.

• One group of "Ulfberht" Viking swords appear to made from crucible steels (perhaps imported from Central Asia). These swords are general of good quality, and better than low-carbon steel and iron swords (which includes many Ulfberht swords). However, the pattern-welded bloomery steel and iron Ulfberht swords are also good quality, with harder edges than the crucible steel ones (and also appear less likely to break - a larger fraction of the crucible steel Ulfberht swords have been found broken).

Crucible steels can be good steels, and are typically better than low-carbon bloomery steels. However, they don't necessarily have much advantage compared to high-carbon bloomery steels or Chinese-style steel made by decarburising cast iron. Crucible steels are usually ultra-high carbon steels (UHC steels), with 1.5-2% carbon, and it can be difficult to get the heat treatment right when hardening them. With poor heat treatment, a crucible steel sword can be brittle enough to break if dropped on a hard floor; crucible steel swords were sometimes left unquenched (i.e., unhardened) to avoid brittleness.

There is also the question of cost. To make crucible steel, one needs to start with iron. That is, one must have already made the iron in a smelter. There are two classes of crucible steel recipes:

• In a closed crucible, combine wrought iron and cast iron, with the wrought iron (low carbon) and cast iron (3-4% carbon) combining to produce an UHC steel. The closed crucibles are placed in a furnace, and heated, ideally to a high enough temperature to melt the cast iron.

• In a closed crucible, combine wrought iron and a source of carbon other than cast iron.

In both cases, wrought iron needs to be produced first, usually in a bloomery furnace. Note that steel can be directly made during smelting in a bloomery furnace. This requires higher temperatures than the minimum required for effective smelting - a higher temperature is necessary for sufficient diffusion of carbon into the iron. Thus, direct steelmaking in a bloomery furnace will be somewhat more fuel-hungry than making low-carbon iron, but not greatly so (and if the bloomery is larger, the fuel efficiency is improved).

For crucible steel using cast iron, the cast iron can be made (often accidentally) in a bloomery - this will happen if the temperatures get high enough to melt part of the bloom (the spongy mass of iron, steel, and slag produced in bloomery smelting).

For bloomery steel to be usable for many applications, it needs to be repeatedly folded to reduce the slag content and to homogenise the carbon content. This was famously done for Japanese swords (the Japanese tatara furnace is a bloomery furnace), but was also a standard procedure to bloomery steels and iron around the world (yes, Medieval European swords also used folded steel). Some steel is lost during this process, to oxidation during the repeating folding, welding, and forging. Fuel is used to heat the steel during this process.

To make crucible steel, the crucibles need to be heated. This also requires fuel. Whether or not this produces cheaper steel than direct steelmaking in a bloomery (taking into account fuel costs and loss of material during folding) depends on the size of the furnaces involved - larger furnaces, both for bloomery smelting and making crucible steel, are more efficient (i.e., less fuel is needed per kilogram of steel produced).

Both direct steelmaking in a bloomery and crucible steel are more expensive that the Chinese process of making cast iron in a blast furnace and decarburising the cast iron to produce steel. This accounts for the Chinese process remaining dominant in China. Again, this efficiency depends on scale - much of the efficiency of the blast furnace comes from the ability to continuously feed it, putting ore and charcoal in the top, and tapping liquid slag and cast iron from the bottom. In a continuous process like this, fuel is only wasted heating the furnace at the start. (The traditional Chinese iron industry was still operating in places into the 20th century. Traditional blast furnaces at that time could operate continuously for 40 days. This isn't very long compared to modern blast furnaces, which can operate for 40 weeks, but provides a large fuel saving compared to batch process like the bloomery.) This process does require more advanced furnace technology, plus knowledge of how to turn cast iron into steel, which appears to account for the lack of spread of this technology from China (until possibly in early modern times).

The different costs of the different methods - which vary with the scale of production - probably account for some of the preference for one method over the other. The other issue is that UHC steels need different forging techniques and different heat treatment. If crucible steel is imported (rather than finished products made from crucible steel), it is quite possible that local smiths will try the material and consider it poor, due to not knowing how to make best use of it. These two factors - cost and associated knowledge to best use it - would have limited the spread of crucible steel technology, combined with the fact that the steel produced by other methods could be good quality, and could be used to make products of excellent quality.