It's doubly puzzling because only a short time before, in the black and white era, Hollywood had no difficulty shooting dramatic scenes (above) in a convincing way.
Sometimes I think Technicolor was to blame. The color was gorgeous but lighting it may have been so difficult that studios opted for simplistic set-ups. Maybe wide screen was to blame. Maybe flattening long lenses.
Another possiblity is that the minimalist aesthetic had set in and art directors simply thought that less was more. Look at the Hanna Barbera cartoons (above) from this period. Some of them are mind-numbingly bleak and arid, but I doubt that many people complained.
Here's (above) what we would call today "TV lighting" and staging applied to a feature film. The characters are reduced to simple shapes. The background is generic, made a little dark in one spot to make Doris Day pop out. The whole look is flat. Probably the technicolor was beautiful, but so what -- the composition and modelling are lifeless.
Here (above) human beings are reduced to cardboard cut-outs; just shapes and colors. It's scary because you get the feeling that the stories were simplified and streamlined to fit the clunky photography.
Me, I prefer lighting that brings out the gritty humanity of the characters. I also like to see lots of extras, like in the scene below. That doesn't work at all in animation, but it makes live action spring to life.