Hardware mixing was killed, because it turned out that it is more efficient to mix several streams with CPU and move just a single one via the bus. It was also more flexible and without weird limits - for example, GUS could mix 14 streams at 44,1 kHz, and if you went above (up to 32), the frequency of each stream went down.
Yes, that was dmix :) And it fits the timeline, hardware mixing was killed off back then by soundcard vendors/microsoft, iirc.