Couple of reasons.
But ultimately finance and family.
The amount of money, even a moderately sized band can make these days is actually very moderate. You can't make money from album sales these days. The best source of income for most bands is now from tour tickets and associated merchandising.
Of course this has additional implications in terms of the impact this has on individuals and groups - lengthy periods away from home, friends and family. It can be incredibly lonely and tests the strength of even the most solid relationships.
There are few artists who tour constantly. The one I think of most who does at the moment is Frank Turner. However this has been at the expense of relationships and although I have a lot of time for him as an individual, I think living on the road for so long is not a good thing. I think it becomes very difficult to settle and relate to others living a 'normal' life.
The Charlatans have toured more sporadically, but consistanty with a fair amount of success, despite several tragedies. From what I understand, a certain amount of the motivation for them was being done over by their accountant and it became a necessity. And they have survived by buildin a solid and loyal fan base. Likewise The Manic Street Preachers. But both bands had contact and assets they managed to build up during the boom 90s. Something that makes it virtually impossible for newer bands.
As for what happens to people when they leave the industry; well it really depends on what they have to fall back on and how smart and forward thinking they are. I know of some who have worked in factories between albums. I know someone who ended up working at a local petrol station. I know one who bought a pub as a backup when they could. One who built a studio (which helped them do a self funded later album). One who bought a club. I know others how have gone into songwriting for other people. I know others who earn a living as session musics as the work isn't dependant on their own album sales.
And then there's the likes of Dr Brian Cox!
As for Duffy. She was dumb when she ditched Bernard Butler... someone who knows the industry inside out. I think she could have had a long career otherwise.