The original GUIs were all flat because that was the default. A button was a rectangle with text in it. A checkbox was a rectangle with or without an X across it. Pure black on pure white, no colors or shades. Windows used this style until Windows 95.

Nobody seemed to have a problem with it. It was largely clear what was a button and what was a checkbox. In hindsight it was certainly uglier than the 95 style (maybe just because I grew up with that) but it wasn't unusable at all. As you say, it was clear what was a button, what was a checkbox. I think it was because GUIs were mostly made out of standardized elements whereas today we have everyone trying to put their unique spin on every element.