In this case the reason for dropping support is most likely that the only DRM they can support on that older hardware has been broken. There's no technical reason why it can't be supported, and I doubt it would cost them much (or even anything) to continue support.

Meanwhile, I can still read physical books I've had since I was a child, 40 years ago. The Kindle is undeniably more convenient than physical books, but this is absolutely an unnecessary sunset of these devices.

In my post I said "this kind of stuff" which also includes their DRM policies (which is the real reason they are ending the users' kindle support).