The easy explanation is this.
How often have you had to meld or use materia in the game prior to being capped? The correct answer is never because your gear outdates so fast if you ever melded gear it would be worthless in a matter of hours. Regardless of cost there are also several anoyances within the system that push people away from using materia. So let's break it down to see the key issues with Materia.
1. It's outdated quickly: Why would I spend gil/time upgrading the gear if I will be replacing it in a few weeks? You will see people start to meld up once Ilvl's start hitting their casual caps.(Alex gear and whatnot)
2. There are skill caps and several tiers of useless materia you need to know before even melding: For such minimal gains there are a large number of reasons it's anoying to purchase materia just to find your capped allready or can't efficiently use your materia. So people tend to just sell/avoid using it to not bother with needing a encyclopedic knowledge of materia caps for all their gear. Let alone even knowing what materia is best to use these people aren't going to reddit looking for BIS melding guides they want to know this stuff at a glance.
3. Inventory space: Who wants to lug around 10-20 kinds of materia when inventory space is at a premium
4. Melding NPC's are new and not widely known about: You would be amazed at how many people didn't even understand how to meld materia or what it was for when you needed a crafter to meld for you, now that there is a NPC to do it...they still don't know it's an option. Very simple information for us core players tends to sail over the heads of more casual players due to them not being as invested in the mechanics of the game itself.
I mean I could go on for hours about how sloppy the whole system is, it's like allot of things in XIV it's overly complex with no real reward for even managing to understand it. The people who know about it also undsertand it are still marred by the convuleted steps to get the blasted stuff into the gear...and for what it to be wasted investment a few weeks later and be expected to meld again?