Why was the wearing of bike helmets made compulsory?

Yes they should, because for every sport/tranporttation there is protection, and if you use a helmet from for example skate boarding and used it for skateing it wont work the same. Finally if you fall without a helmet, you might DIE!
No easy answer to that. Overall (utility)bike riding (not racing) is very safe, so even if all riders wore helmets it wouldn't save many lives. Then the helmets themselves only offer a limited amount of protection. Basically they're good if you topple over, but not strong enough to help you much if you end up under a car. Still, if all adults wore helmets it'd be easier to get kids to wear helmets, and they're the ones most likely to benefit from them due to the kind of falls they take.
Some places already do, at least for under age riders.

Apart from that, it's a so-so thing. Utility-oriented bicycle riding governed by common sense can be very, very safe, so that kind of rider may never have a fall where a helmet might have helped.

OTOH the brain is a precious thing, and it only takes one unfortunate topple to do yourself irrepairable damage.

Given how cheap they are, and how easy they are to wear and get hold of, not using one seems kinda silly.