Why don't they scale?
I used them for some years for a team of ten or so people who all first had to learn to understand how they worked so might that be the problem?
The configuration of ssh vs https can break a lot of workflows, the inability to (reliably) track a branch from a submodule can make maintenance a pain, I've never really figured out how to reasonably do a rebase in the presence of gitmodules changes on both branches, github actions had broken support for submodules for quite awhile... just to name a few.
There's not one giant issue with submodules. There are dozens of small annoyances and footguns. I have yet to see a problem that is better solved by git submodules that can't be solved another way.