Modern components produced by modern materials technology are indeed requirements for a "mountain bike" that can negotiate the rugged terrain that represented the norm before modern roads.
I think people are confusing the road conditions. The mountain bikers are intentionally finding the harder, more challenging trails. Much like rock climbers will climb up the cliff, not the back side of the cliff where it is a simple walk to the top. If you are riding the bike because it is your only means of transportation besides shoe leather, you select the easiest path. And I think people are making dirt paths to be worse than they are. Sure, right after a heavy rain it is a bit challenging. And if too bad, I could have walked. But most of the time, the dirt is as hard and flat as your kitchen floor. To be more precise, if you have the dirt basketball court that is used a lot where the dirt is 100% compacted, this is what the trails are like.
Now sure, a horse would have been better. But lets be fair, a well trained horse is still a better way to travel than a mountain bike. If I had had a horse, I would have used it. But a horse is vastly more expensive in the 1970's and early 1980's. So we are then down to costs. How much does it cost to make and maintain the bike compared to said horse? I can't answer this item.
Now to the cities, sure some cities may be too crowded, but back then a lot of Europe was small villages surrounded by fields. If cheaper than a horse, I bike is good way for a messenger to go from the village to the fields. Or to ride to the next village to pickup mail. Sure, if you need speed a horse works. If bunch of men, probably use a wagon. If bulk goods, use a wagon. After a very heavy rain with flooding, walking probably is better. But if just you are traveling, and the distance is 2-10 miles, a bike will be the best mode of transit short of a horse well over 90% of the time. The question is not would a primitive bike beat an expensive horse or modern technology. The question is "In areas with average quality dirt paths, can you get there faster with a bike?" Will you be less tired? In my experiences, the answer is a bike is faster and less tiring.