The participation trophies of the 80s and 90s were for the parents, not the children. (See sibling comment with 'tae kwon do tournament.') Perhaps it made parenting easier, "Be proud you tried, this shiny bauble is all the proof you need!" Or, IMO more likely, the parents liked the affirmation it awarded them for their effort and/or they made for easier status signaling when displayed in a pile for house guests to admire.

I know as a kid I never gave two poops about 'em. They felt condescending.