I think that most active, current Linux users see fragmentation as a good thing, because they absolutely don't want consolidation of power. Many will point to a time when GNOME reigned supreme, and how did they use that power? To repeatedly completely redesign the GUI in ways that the community hated, because "we know better".
There is a much larger group of people who would support "One Desktop Framework To Rule Them All", but they aren't as loud, so they don't get heard.
Wait, did Gnome ever reign supreme? I feel like there was always a back and forth with Gnome and KDE?
I'd say that the momentum in the 1999-2001 timeframe was almost overwhelming, with a lot of buzz around the likes of Eazel and Helixcode, together with the excitement of Sun choosing it for Solaris.
It was certainly enough to push GNUstep/Windowmaker and Enlightenment into "also-ran" territory.
If Gnome 2 had come out a year before the dotcom crash rather than the year after, I think it probably would have definitively overtaken KDE as well. In the event, it didn't work out that way - and, as you say, KDE did enough to hang on (thanks largely to Konqueror!)
Meanwhile many of the folks responsible for those companies are now working with Microsoft and Apple technologies, which kind of tells how much they runned out of steam trying to make a useful GNU/Linux desktop.
KDE was going equally strong at the time though. Anecdotally, it feels like more people were running KDE 2/3 around that time period than Gnome. And while Gnome did get an overall user count boost from becoming the "enterprise Linux DE", that same thing also turned off some people, with projects like Xfce getting a boost. So I wouldn't say it ever really "reign supreme".
Never fully, but it's how we got systemd nearly everywhere - GNOME 3.8 arrived with support for polkit-based approach for, among other things, power management, and mandated logind. Which at the time was very much a banana that required the gorilla and the whole jungle to run. Some tried to deal with it, some managed to even separate udev and logind out, but the immediate effect was that distributions that avoided systemd or made it optional - including ones that were exploring alternative paths, were forced to adopt systemd or remove support for GNOME 3.8 and newer.