JREs are buggy. And most
Windows PCs, it turns out, don't have JREs despite Sun's "efforts". And most
ordinary people who use Webstart, don't like it, or don't quite get the concept of purchasing software delivered with it.
When you develop software in the real world you need to be absolutely certain that something works as you want it to. Therefore you tend to ship software with everything it depends upon as much as possible built in to the distribution. It's bad enough that we have to content with broken graphics and sound drivers, as well as the curious foibles of different operating systems.
At this point I'd just like to say hurrah for MacOS and Apple, who have really sorted it out
and are probably the only success story to have actually come out of Java in recent years that isn't to do with boring old J2EE servers.
Puppytron for OSX is 1.5 mb