(Disclaimer: author and editor of the modern custom elements spec here.)
The specific "failed promise" that I see is largely this positioning of web components vs. frameworks.
How web components was originally envisioned was as leaf-node or light-DOM-using components, of the sort HTML already has. For example, , , , etc. Web components was supposed to give you the tools to create your own components of this sort, such as , , , , etc. In particular:
* Custom elements gives you the ability to just drop in tags, like you do with vanilla HTML, and those tags can react to lifecycle events like being added/moved/attributes changed, automatically. The browser mediates between those occurrences and the web component's code.
* Shadow DOM lets you encapsulate the inner details of your component, while using slots to reproject content into it. So e.g. could have its innards entirely in shadow DOM, just like . While would be given children by the web developer using it, with some of those children being special (like is special for ), but some parts hidden in the shadow DOM and not provided by the web developer (like the disclosure triangle and behavior for ). More on this in https://glazkov.com/2011/01/14/what-the-heck-is-shadow-dom/
From this perspective, the lack of data-binding (cited in a sibling thread) is not a big deal. There's no data binding for , or , etc. You just use normal DOM children and attributes to supply the data, perhaps with a framework to do that via binding or React-style re-rendering or whatever.
Instead, we've seen people use web components as a React competitor. They want to write their whole app in web components, starting from a component on down. It turns out the system is flexible enough to do this, but it wasn't designed that way from the beginning, and doing this doesn't play to its strengths. You end up just creating new frameworks, which are slightly smaller and potentially a bit faster than other frameworks because they can rely on native code for some of their lower-level building blocks like style encapsulation. But you're not living up to the promise of reusable components which behave like built-in elements.
Edited to add: I do understand where developers are coming from in this regard. Using web components for leaf/reusable components and React/Vue/whatever for app-specific components is probably twice as many component models as most app developers want to deal with. I'm not sure how to deal with that tension.