My (possibly uninformed) understanding at the time was that it was Docker, not solely filesystem performance.
WSL1's file performance is pretty much as good as it gets on Windows, since open(2), read(2), etc are all translated directly in-kernel from Linux to Windows API calls. It's still slower than a real Linux kernel since Windows' filesystem filter drivers add a lot of overhead to every operation, and Windows Defender and its realtime scanning in particular makes it 10x worse. (NTFS itself is fine.)
WSL1's filesystem situation is now "fixed" by Dev Drive, which is just a new partition with most filters disabled and Defender is put in to a different mode where scanning is asynchronous instead of blocking every open(2).
WSL2's mounts of Windows disks still has to deal with all of the above, plus the overhead of serializing every operation over a VM socket, which is largely fixed by what this article describes. So even if you've enabled virtiofs to speed up WSL2's cross-VM transfers, you're still going to hit the same Windows filesystem caveats that apply to WSL1 and native Windows apps.
On the other hand, the WSL2 in-VM ext filesystem (ie, the / mount) will be the fastest to Linux apps since it never touches the Windows side, but accessing those files from Windows sucks since they're buried in a VHD image, accessed over a slow 9p (I think) network-like mount on \\wsl.localhost\distro\
All of that to say filesystem perf may or may not have been a factor in the switch from WSL1's very cool NT persona architecture to WSL2's decidedly more boring VM design, but it was pretty clear that Docker was the real showstopper.
Devs needed to run containers, and WSL1 couldn't (and still can't) do it.
I imagine Microsoft took a look at what it would take to implement container support in the NT kernel to the point that Docker would work, and decided it was simply too much work when they could just slap a VM in and get the entire Linux kernel API surface for free. So thus we got WSL2.
I still use WSL1 for light work like running ssh, since there's basically no overhead at all (5 MB of RAM total to run ssh), compared to needing to run an entire second OS in WSL2. And as long as you don't need any containers, even heavier work runs nicely on WSL1 since there's no VM overhead or network NAT shenanigans.
But if you need containers, you need WSL2.