I think you're over a decade late to the argument. I think most of us know what a hybrid is. It's the 'cross' between two distinct categories. In the cycling world, it's the road bike and MTB.
Hybrids were born in the mid/late 80s. And to investigate the question of why the sudden industry interest? Usually it's the standard reason, one company had a bright idea that had market success. Others take note and soon followed. Saturation then was inevitable and demand subsided.
T-Mar and BianchiGirl stated that Bianchi was the catalyst for hybrid emergence. What followed would make sense.

And I differ in opinion that they all but disappeared in the early 90s. I own a 1994 Schwinn Crosscut, their top offering in the hybrid/crossover category. Schwinn even hired World Downhill Medalist Glen Adams, to be their Manager of Product Development. The Crosscut and CrissCross models had his design input.
Hybrids are still with us, just that the design definition has evolved with the years.

iab:
IMO, that vintage Bianchi is not a 'hybrid', just a road bike with an upright bar. You can then point to any number of similar bikes from that era.


edit...
My $0.02 on why so heavy, and the stigma of compromise....

They were heavy because most manufacturers viewed such buyers to be neither road or MTB extremists. Performance is likely not a priority. Many offerings were low end. But a few did release well-designed and spec-ed out models. Bianchi being one. Some are borderline production cyclo-cross bikes.
My Crosscut is full Cr-Mb DB throughout, geometry is sporting with a high BB, mid level Shimano group equipped, and comes in at 26 lbs stock. That's not heavy in my book. And a bit of parts swapping (tires, stem, drop bars, shifters, pedals) by me has it probably under 25 lbs.

As for the compromise argument....what makes vintage rigid MTBs so good and popular here as pavement pounders? The same qualities but only more so in some of these hybrids (not all are created equal). A rugged versatile road bike.