Because it was simple and cheap.
All you needed was a IIS server on a Windows machine. Anyone with a Windows 2000 or Windows XP machine could develop ASP code. You could write in in a text editor. To run the software you only needed to get a server with Windows NT server with IIS.
You could develop on an Access Database and then migrate easily enough to SQL Server. This made ASP an idea platform for young entrepreneurs who wanted to quickly pick up server side coding and produce a web solution at cost. You could write it and test in on your own PC and deploy. Sure it cost more than Perl, but Perl was not a very easy language to understand.
Things have changed a great deal. With the confusing way Microsoft had introduced .NET, through the different version of .NET and the issues with compatibility, to the fact you have to have a MSc in Computer Science to really fully understand .NET to the fact that .NET seems to think it knows what you wanted to write, year after year it became actually harder just to trash something out that implemented your core idea with the Microsoft back end.
Though WSS in theory can accelerate Web Development, the fact is if you don't intend to do with WSS what Microsoft thinks you should do with WSS its a pretty hard system to build web solutions in.
Recently I have been doing some development looking at Web 3.0 crowd sourcing ideas. I don't have much budget and I don't have much time. I will say simply that I would not even try to do this in .NET. Just the costs of getting the proper server and the fact that ASP.NET now using C# has become almost as difficult to code as J2EE. If you are running an Enterprise solution it is great, but I just want to get some quick server side code out.
And thus I have been introduced to PHP. Lets say it has been love at first site so far. The language is simple at its base, easy to learn and use just like the old VB was. And without typing all the casting issues of VB.NET are gone. I have found I have been able to implement POCs for Web 3.0 logic connecting to RESTFUL Twitter APIs using PHP on a server that costs be about £30 a year. I could download Komodo for free, and I don't have to spend hours and hours figuring out what everything is.
Certainly I am not making mature complex Enterprise ready solutions, but that is precisely the point. As technology evolves individuals without a lot of time and money are going to want to test some strange idea. They are more likely than not going to throw the idea away. The entire process of planning and documentation leading to Enterprise standard code in .NET or J2EE is not right for everyone.
And it is especially not right for the kind of activity that adds the most long term value to the Internet as an industry: quick R&D by small groups of guys and gals in their dorm rooms or late night in the den.
So as ASP open the door to a new class of web developer in 1999 and helped accelerate the rise of the Web PHP continues this. Sadly ASP.NET is now too costly and too complex to be a comfortable place for a new generation of start ups to play and create the future.