...regarded as treasured social institution in communities seems ridiculous to me.

I'm going to hazard a guess that you were not part of that community, either due to your age or interests[0]. However, you made a point that compelled me to think, mainly because I do have fond memories of the trashy mall we used to hang out at[1].

So, as much as I sort of jumped to defend myself as a member of that sort of society, it's somewhat true. But how were social interactions ever handled well in the past? People interact around doing things. At times, we go out just to interact, but interaction is usually a side-effect/part of something else we're doing[2]. Prior to the internet, Amazon was the mall. You had department stores that carried a diversity of products all on their own, and specialty stores that covered the odd. As rents went up, the specialty stores disappeared and the malls all became, somewhat, identical.

The malls died partly due to the collapse of the anchor stores, but partly because they became boring. While the "anchor stores" (Sears, JC Penny, Macy's) were always important, they became the only reason to go to the mall. You knew the "mall brands" (Things Remembered, The Discovery Store, Spencer's, Wetzel's Pretzels, Sbarros) -- hell, you knew when you received a "mall gift" (a gift from one of said stores that's cheap, over-priced and an attempt at being unique). And as an added bonus, unlike all of the "modern malls", you only had to freeze, briefly, while walking from your car to the store in the half-foot of snow.

But I digress -- for me, the explanation is a little less ominous: We buy a lot of crap. When you needed something, the mall was the most likely place where you'd find it, and you'd probably find it at a price that was on-par with a discount free-standing store (K-Mart) but had a greater guarantee that all of the things you needed would be able to be handled in one trip. This brought people to the mall. As a result, in the 90s, when you just wanted to interact with someone -- anyone -- you went to the one place where there was a lot of people interacting.

It's not that "society failed to provide a place" -- it's that "society" isn't a thing. It doesn't care. The mall became "the place" because we were using it served a useful purpose. The service it provided is now provided by a more efficient means. Some of that interaction, however, is also more efficient[3].

[0] Maybe you weren't all about orange chicken at Panda Express. That's OK. :)

[1] It's funny, because as an adult, I think of the fun times/friends/experiences that we had at the mall -- mostly being teenage boys, looking at teenage girls -- but I see the whole thing as silly, and the mall always felt -- even back then -- like a bit of a "white trash place to hang out".

[2] Even when the explicit purpose is to interact such as a first date -- first dates. I've had "5-hour interactions" by accident, but the date started as "Let's grab lunch/dinner", not "Let's sit in a chair and talk for 5 hours".

[3] There's something to be said about trading the "meaningless face-to-face interaction with strangers paid to be friendly" with the "meaningless emoticon left on a curated wall in reaction to an inane comment from our closest hundreds of friends".