XHTML was dropped because it wasn’t backwards compatible, and it was too strict in its syntax. Minor syntax errors that could be automatically corrected by the browser turned into full page errors.
Can you think of a minor syntax error example that you believe should be corrected by the browser, and better than the author would (had the Web browser notified them early -- by aborting rendering as was the case with XML)?
There's a bit of irony with the fact that HTML 4 which _did_ have browser "correct" errors (albeit in non-standardised manner) _was_ what motivated XML in the first place -- it's just that in light of the wildly different correction behaviour between Netscape Navigator, Internet Explorer, etc, they decided on a pragmatic solution -- abort and tell author, like a C/C++ compiler. The latter can also correct syntax errors, strictly speaking -- but you'd be hard pressed to find a programmer that would seriously consider letting the compiler do that. Why HTML should be different?
Say you forgot a `</p>` and then comes a `<li>` -- since `li` elements cannot be children of paragraph elements, I guess the Web browser, in compliance with HTML 5 for example, could mandate that the paragraph ends just before the `<li>`, meaning it behaves as if there _was_ a `</p>` before the former, _and_ also inserts... what, a `<ul>`? Why not `ol`, then? This heuristics is messy, if only because the Web browser doesn't have enough context to _know_ what the author wants, and can't assume a single kind of omission. And HTML 5 simply defines some default behaviour, handwaving the problem, but the truth is no HTML 5 authors -- myself included (I have been writing HTML in one [proto-]form or another since 1994) -- ever remember what those rules _are_.
I think this is _the_ most popular criticism of HTML 5 vs. XML, that I have seen mentioned. Which is telling, quite frankly. It makes me think that the powers that be that pushed HTML 5 really had a different agenda than what they purported to have. We might never know the politics behind it, but I struggle to comprehend the wisdom of a decision to basically overhaul the lingua de franca of the Web because "XML parsing is hard!" then replacing it with HTML 5 and its peculiar "context sensitive grammar" noone ever remembers or bothers to look up, and the other features like custom elements (with the latter, by the way, in the spirit of "let's just ship it and see", they kind of foundered with the sub-classing there -- Apple rightfully refuses to implement some of Custom Elements API because it flies in the face of Liskov's Substitution Principle).
Fail fast is a feature, not a bug. It's much better to get clear and actionable feedback rather than the page silently rendering incorrectly in some subtle manner.