> What the hell was reddit doing that they didn't immediately implement an image hosting feature to keep users on the platform?

Image hosting is insanely expensive and they couldn’t afford to do it or were smart enough not to.

Every image host that added paid accounts or ads all over the place had a horrible reputation at the time (see photobucket). They likely wanted to avoid ruining their reputation before going public.

Heck even Imgur caught heat when they needed to start paying the bills.