...I don't understand how this concept relates to any particular period of time. It's certainly not an "old timey" one. The vast majority of old children I've known have been this way when they were friends with a pair of siblings. There have also been exceptions.

As far as an explanation goes, your previous comment of it not being "so difficult to understand" actually plays into this in that it's not so much a matter of understanding. People can understand something perfectly and thoroughly while still having an emotion running counter to their understanding. This is just a wild guess (perhaps an educated one?), but maybe it has something to do with the way the brain works. As various concepts, ideas, memories, and feelings are stored in the brain, they "reinforce" over time the more they're recalled. When two separate things become associated in the brain, the "route" between those two points in the brain becomes more and more robust to the degree that the two things (memories, ideas, feelings, etc.) effectively become one thing.

People with siblings have spent their entire lives, some since birth, having the varied and complex intricacies of sibling relationships hardcoded into their brains to the degree that it's a fundamental truth that they can't imagine not being familiar with. Only children have spent the same amount of time forming and reinforcing neural pathways that didn't acknowledge that particular type of interpersonal relationship.

I have sisters (though grew up with only one of them), and while I can attempt to imagine what it would have been like as an only child, no thought experiment will allow me to ever be familiar with that perspective. In the same vein, an only child might understand what a sibling is and what that entails due to what they've encountered with their friends and in fiction while at the same time having no basis for comparison in their lives, and on the mental level, literally lacking the specific programming to really understand it.

I have, more than once (though mostly in high school), heard an individual say something like "Ugh, they're so close it's creepy!" (random girl at school regarding male/female twins) or "Hanging out with your brother again? You fucking him or something!?" (from boyfriend to girlfriend). They were only children in every instance. I don't "get" that perspective, but I suppose I understand it, at least mechanically. Don't get me wrong, I wouldn't expect an only child to react this way, but if they do, it's not all that outlandish once you think about it. One person dates another of the same orientation, and their partner spends lots of time with a third person of the same orientation. The first person understands that they're siblings, but lacking those strong connections in the brain, what does their brain default to? Competition. Their brains can't fit the situation into anything they've never even had the ability to program into their brains, and "sibling" is much closer to "friend" than it is "parent", so what form of kinship does the brain default to? Friend. And when a person's partner is spending lots and lots of time with a friend of the same orientation, what categories would the first person file that situation into? Either "trust" or "distrust". To me, it's a pretty straightforward and obvious concept to grasp. I don't really get the "from the past" comment. Were people more prone to suspect incest in the past or something? I don't really think biological functions are tied down to specific decades like that. Anyway, didn't mean for this to be long, but hopefully it's some food for thought.