Agreed. It's crazy how Apple let go of that market when they in fact pioneered the wireless revolution back in the airport days.
Yes, but that was before home broadband was such a mass-market thing.
I don't know about other countries, but here in the UK most home broadband deals either include a bundled router or offer a "recommended" model at a hefty discount... and, frankly, the majority of non-technical users are best off sticking with that because - even if its not then best router in the world - when it goes wrong, the denizens of the ISP's call centre should have the appropriate script & the correct settings (if they're not pre-programmed in) to get it connected to broadband. Sometimes - certainly in the past - they've also been bundled with TV-over-IP packages that need specific traffic routing settings.
Then you've got complications like multiple router models with built-in ADSL or VDSL modems vs. ethernet + an external modem (so, in the UK, a few years ago, the biggest FTTC provider switched from separate VDSL modems + PPOe to the router to all-in-one modem/routers) and those infernal, unreliable ADSL filter boxes... I can really understand why Apple doesn't want consumers expecting them to sort out their ISP problems.
People who opt-out or replace standard routers with more advanced routers generally have... more advanced needs. Such as 'serious' gaming (mustn't get fragged because of an extra 1ms lag...) which isn't really an Apple thing, or heavier commercial applications (for which Apple couldn't easily produce the range and diversity of equipment already on offer).
The other thing that's changed is that most things - including Macs - has moved to SMB/CIFS for file sharing (no more AppleTalk/AFP)
and the standard, open source SMB server - Samba - has implemented Mac and Time Machine support (and, before that, Netatalk had got pretty good), so many widely available NASs have pretty good Mac support so there's less call for a Time Capsule-type product. The one thing that
would be handy is an iTunes server - but it's perfectly clear that Apple want you to move to streaming, so that's not going to be a priority for them.
Just as with printers, and the xServe, Apple doesn't stick around in a market where it can't find a Unique Selling Point to justify a premium product. It's also
much more important that Macs work seamlessly with non-Apple printers, servers, routers, NASs - and that
has improved overall (even if it's not perfect) since the good old days... but it does remove one of the selling points for Apple peripherals.