Historically, it made deletion rather difficult with some problematic edge-cases. You could unlink a directory and create an orphan cycle that would never be deleted. Combine that with race conditions on a multi-user systems, plus the indeterminate cost of cycle-detection, and it turns out to be a rather complex problem to solve properly, and banning hard-links is a very simple way to keep the problem tractable, and result in fast, robust and reliable filesystem operations.