Because lots of people use it really badly. Wasting time and space with paragraphs like: "Hello", "Hello", "Did you see what happened", "No, did you?" etc.
However, if you can use it well, then go for it.
This, a thousand times this.
Dialogue gets crap marks because it's by and large crap dialogue. I used huge amounts of dialogue in my Extension 1 piece and it worked out fine.
Markers hate the player and not the game. It's not surprising though when the only things most people read for fun are Harry Potter, Twilight, and the interviews in pr0n magazines. These are not examples of dialogue. They are cries for help.
The biggest mistake is to use dialogue as filler. Don't use it unless you're sure it will lead somewhere. And as absolutezero said, things like 'Did you see what happened' just have the reader looking back, not forward. Even leading questions like 'Should we do that now?' or 'How is that possible?' mean that the dialogue can only be added to by saying something constructive.