A far more advanced mixer was introduced.
First to go was the audio issue, when Reason was merged with Record and gained audio tracking, later expanded with time stretching and more. You’d think that might have counted against it but in fact the stability and ease of use this approach ensured at a time when “bigger” DAWs and software generally was still plagued with crashes and lockups meant Reason established itself very quickly and remained popular.
You could connect it to other DAWs using ReWire, which Propellerhead invented, but otherwise it was pretty much self contained. It was MIDI only, didn’t track audio and didn’t support plug-ins. When Reason debuted way back in 2000, it set itself apart from other DAWs by virtue of what it didn’t do as much as what it did do.