Remember several things:
(1) They never considered continuity to be important. If they had what they thought was a good story, they told it. They figured (correctly at that time) that no one would care if a year or two before, they had a story with a conflicting outcome. DC was not alone in this; TV shows and comics and similar multiple-stories about the same character(s) never worried about continuity back in those days (1930s through 1960s, say.) As writers in the 1960s (I think Tolkien was a huge influence) started to care about continuity, and as people started collecting the old comics, continuity became an issue.
(2) DC had been publishing for 40 years or so. A character would be popular with one group of kids and get his/her own comic book, and then after five or ten years, that generation would have outgrown comics (the idea of adult collectors was rare) and lose interest. So the character would drop. Then, a decade later, they’d try to moderize and revise the same super-power. So, I clearly remember the revival of Green Lantern (Hal Jordan) with a new origin story.
(3) Especially with Superman, they needed to come up with more and more powerful villains for him to battle. Watch the George Reeves’ SUPERMAN TV series from the 1950s, now out on DVD (Season 1 and 2): his powers are pretty tame, the villains are almost always normal human crooks with some sort of clever or mysterious plan. There’s an occasional robot run awry. The interest was in the mystery plot, rather than in Superman’s powers. The same happened in the early comics, but by the 1950s, they needed more powerful villains to make the stories interesting. The more powerful the villains, the more powerful Superman: to the point where, indeed, Superboy in one story pushes the earth a trifle off its orbit.
That would have all been OK, except that they started pulling up the older versions of characters. I fondly remember when they brought the 1940s Flash (Jay Garrick) across the inter-dimensional gap to meet the current Flash (Barry Allen.) It was a cool story idea, so they did it, and never thought about consequences. They did other bits where the current (late 50s, early 60s) version met their earlier counterpart, portrayed as Earth-2.
Then, once you’ve got Earth-2, why not others? It would allow for more interesting stories without disturbing continuity (by that time, a consideration) and so we had stories set on Earth-3, etc. Imagine a world where the Joker is the hero and Batman is evil! I know, we’ll put it on Earth-27!
So, it’s not at all surprising that they had so many continuity gaps and decided to revise and “start over.”