I suspect it's a combination of things - maybe some bigger sellers refused to comply, maybe it's in the too hard basket, or maybe it was never going to be enforced at all (as mentioned above, this is the second time ebay have announced a policy like this, the only difference is that it didn't extend to watermarks last time, so it's the second time ebay have changed their minds). I'm betting the sellers who changed images to comply with policies are less likely to change back to watermarked images, so perhaps they'll announce the policy again next year and retract it again when it's had sufficient time to have the desired effect. (The announcement in the US basically inferred that the policy is being deferred, not withdrawn). 

I don't think it's necessarily a technology issue, because the tech is there though maybe in its infancy in real terms (you only have to look at what Facebook tags uploaded images with to know how sophisticated image recognition software at the very least has the potential to be - it can detect people (and what their facial expressions are, as well as whether the image contains nudity), it recognises specific people, plus specific objects, things like food, outdoor scenery, text, specific animals etc, it's just probably not in ebay's budget to implement here, and differentiating between text on a product box and text added to an image may not be quite within capability as yet).