After reading this bugzilla thread, I searched and came across this interview with Stuart Parmenter, the Mozilla dev who essentially removed support:

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Parmenter: ...One of the probably biggest sort of conflicts was when-so I actually sort of own the MNG library I guess, and all the de-coders and everything. So we had this module owner system, so I guess I'm the module owner of that. And at some point, we had checked in this de-coder for the MNG format which is a multiple network-or I don't know what it stands for.

But it's basically animated PNGs. So animated GIFs were all the rage with, you know, I don't know, 1998 websites or something. And they-but GIF is basically is indexed formats and it only supports 656 colors and it only works with one bit alpha transparency. So either the pixel is there, it's not. Versus PNG, which has full-it has eight bit alpha support. So you can have 256 levels of alpha so you can-things can be translucent. As well as true color support. So you can see as many colors as you want. So basically, you try to do that.

But then something went wrong and they decided that it also needed to do all these things that, like, Flash can do. So it needed to sort of be a movie format and then it-it kind of went-something went wrong at some point. GIFs are very simple, animated GIFs are easy and they-it was basically a very big and complex thing. (emphasis added)

And then after having it in our product for, like, two or three years, we did some searchers and there were, like, fifty of these images on the web. So we decided-you know, we said, this is silly, this is like, four hundred kilobytes, you know, which was, like, three times bigger than all the other de-coders and the image library combined.

So we said, you know, this is-we don't need this anymore. So I removed it and we had a huge uproar. People were, like, "We can't believe you removed this, you know." It's, like-it was one of the, I think, probably one of the few cases where we've really gone in and said, "We're going to remove a feature that we had before." People apparently don't like that.

So I removed that. We had a lot of uproar and people said, "You know, why did you do this?" We said, "You know, we have this set of reasons. It's too big, it's too slow, it's-nobody's really actively maintaining it." What had happened is, the guy who was sort of working on it also said, "We should remove this." But then sort of the maintainer of sort of one of the MNG libraries and stuff that we were using said, "No, No, this is-you know, we'll get this fixed."

And it kind of got ugly for a while. But effectively what ended up happening was, we sort of have a system that's called a "drivers" which sort of-I guess they're in charge of the product releases and stuff or were. And sort of-it got raised up to there and in the end they sort of said, because I sort of said a thing. I said, "You know if you guys can get it under this size and you can do all these things, we'll take it, whatever."

But they never really did. And so they complained and complained and complained and they're still complaining to this day and this was, like, three years ago. So, you know, but in the end, driver said, "You know, figure out how to meet these requirements. Get an active maintainer, do these things." And nobody really has. They've made some effort but it's not really where we wanted to see it go.

I don't think they were really interested in meeting some of the requirements. I think they said, "You know, this is-." They were kind of just trying to chop random bits out and sort of mess with the functionality as opposed to sort of really reducing the size. (emphasis added)

So we got rid of it. A lot of people were mad and, you know, it just sort of-in that case, it just sort of-we just decided that was the right thing to do. But I think in other situations, you know, I think a lot of times it's sort of just very small. Like, I mean, that's kind of a big argument. But you get into a lot of much smaller ones about just kind of minor things or design things, architectural things.

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Attempting to even read this was infuriating (thanks to the verbatim transcription of none-too-eloquent speech), but it galls how some of the devs seemed anti-progress at the time. Cut off a new format with low adoption but a promising featureset, because Flash, a non-open plugin, could be used to achieve similar functionality? Would they have opposed CSS3 transforms and animation at the time, too?

The paragraphs I italicized shows how this guy thought the featureset was basically pointless - as far as I can tell from his fragmented speech, anyway - and that the size was a big deal. What I get from this is that he thought it wasn't a useful format, and so size was used as a justification to remove it.

Many salient counter-arguments were raised in that thread but essentially rejected out of hand without any engagement. Mozilla might not be a democracy, but it would have behooved them to listen to users/contributors/stakeholders more in this case.