Which begs the question: What the hell was reddit doing that they didn't immediately implement an image hosting feature to keep users on the platform? Imgur rose to fame because it was the darling image host of reddit users, and it wasn't long before imgur needed to pay hosting costs and started sucking users away from reddit and into their own "imgurian" sharing hub.
I guess the internet back then was still in the "Open effort to make the internet awesome for everyone" phase, and hadn't yet gotten to the adversarial "Capture users and never let them leave" phase.
But the biggest impediment by far were internet transport costs. I mean, they're still onerous for a lot of media-heavy sites, but it was much worse at the time. Offloading that to third parties made an incredible amount of sense.
It's actually kind of bizarre that there is an Imgur "community". I know the operation ran at a massive money-losing proposition for quite some time.