Roots follow water. When there’s a mat of old stem sitting between the leaf and the soil, and that mat holds moisture for a day after rain, the roots do the sensible thing and grow into it rather than pushing down through it.
The trouble is the mat isn’t soil. It holds very little nutrient, it has almost none of the biology that makes soil work, and it dries out completely after a day of wind. So a lawn with 25mm of thatch is rooted in the worst growing medium on the property — while sitting directly on top of perfectly good ground it can no longer reach.
That is why the usual fixes stop working. Water it and it still browns off, because the water never reaches the roots. Feed it and it greens up for ten days and then pales again, because most of the product lands on the mat and stays there. People conclude the lawn is tired, or the soil is poor, and buy more of the thing that isn’t working.
Worse, feeding actively makes it deeper. Nitrogen grows stem as well as leaf, and stem is what the layer is made of. Thatch is the one lawn problem that gets bigger the harder you throw fertiliser at it.