Because its small, but not so small as to overly challenge the dexterity of normal adults.
Here is a visual comparison of common scales:
N scale layouts can cram a lot of detail into a small space, yet present sweeping vistas in a way that HO can’t in a home layout. If the grand empire is what you want, N scale can really get the job done. Long trains on long winding mainlines, with big yards and industrial scale structures are the meat and potatoes of the grand N-scale empire.
Wandering around the net, you frequently see find N-scalers talking about 18″, 20″ and larger radii curves. If you’ve got the space, cool.
If all you can handle is a 2′ x 3′ board, you can fit an N oval (with 9 3/4″ radius curves) and spur on that with plenty of space left for scenery. Another approach is to simply take advantage of the size and fit a “bigger” railroad into a smaller space. It’s the layout you can’t do in HO because you just can’t fit it. But in N you can.
There seem to be more kits and parts available for N than ever before, but product lines are still thin relative to HO. Steam locomotives are a little on the scarce side right now; diesel is a completely different story. I guess that is what the market wants at the moment.
N-scale Craftsman-quality kits are available from a wide variety of sources, though it takes some internet searching to find some of them. Sound decoders have gotten small enough to fit many N-scale locos now; the only remaining limitation in DCC/Sound caused by miniaturization is limits on functions and embedded memory. Trust me, these limits will be gone soon. Just look what gets crammed into a phone these days.
So, with all the N-scale kits and gear, miniaturized computing, electronics and general purpose robotics equipment available, what you can do is limited only by time, money and imagination. Where space is at a premium, and/or portability is essential, this is a good way to go.