I think this is basically true, but it didn't "die" in the sense that we gave up on it; it just never worked. Systems software was much worse in the 1990s than it today; you could breathe on something with a string of AAAA's and get a 0x41414141 register core dump.

Back in the 90s, it's not as if any semi competent cs student couldn't slice your typical college server like swiss cheese. People thought null terminated strings were fine back then, and patching everything immediately was rare. So multi user was already dubious.

We keep paying ever higher architectural prices for system isolation: user accounts, memory protection, unix permissions, capabilities... and it's all for nothing, when a determined program can almost always escape its sandbox. Should we just give up and assume that all software on a machine is cooperative and non-malicious, and just do our best to make sure we don't run malware in the first place? "Defense in depth" soon slips into "don't worry too much about this layer, the next layer will catch it.

tl;dr Just run as root bro, focus on the exterior attack surface, and don't download random crap.