As far as I've figured out the answer is that some people involved (the ex-PARC Scott McGregor and Charles Simonyi iirc) genuinely thought tiling was better, while others (Bill Gates?) disagreed but went along with it to avoid lawsuits.
As a tiling window manager user, I think I agree! :D
I think stacking windows looks better, makes for a cool screenshot when trying to sell the thing. But tiling windows are more ergonomic for actually using the infernal machine.
For me the revelation was that I have never said "Oh boy I sure am glad this window partially overlaps this other window" I either want one full screen windows or a few windows side by side. Why do I have to handle this myself? and went to the dark side, a tiling window manager. To the point that it really chafes now when I use stacking windows, It feels like I spend most of the time shuffling windows around.
To ease the overlapping window pain many linux window managers have a feature where the focused window does not have to be the top window and this makes things a lot better, you can be looking at the top window and typing/clicking on the partially obscured bottom window.