Why can't you do this anymore?

It's intentional. It stops the mindless quote pyramids of doom. Look on the bright side: Before, the quote tag (any tag, actually) broke after like the 3th or 5th level; now you can quote pyramid all you like, as long as you put in the effort to do it. Besides. if people would just replay to the post they're replying to, you wouldn't need stupid quote tags for "conversation flow", because the flow would be evident.

But what if that single post that they are replying to had quotes in it that the original poster was replying to? They disappear, and the quote of the 2nd poster could possibly not make sense.

I can understand there being a limit, but why eliminate it alltogether? Having a limit of 3 quotes inside a single quote would be perfecly fine. It helps a reader backtrack relevant information without having to read the entire thread.

I already know what your reply to this is going to be, use the threaded mode. Not everyone likes the threaded mode, and not everyone uses quick reply correctly, so in my opinion linear mode is superior until everyone uses quick reply correctly rather than just replying to the last post.