Fireside Chat was an experiment in bringing the heat away from AppleOutsider. Basically, political discussions or any hot-button issues were for Fireside Chat, and things like "What song are you listening to" or "Bunnies are soft" were meant for AppleOutsider.
Actually I really don't know why they closed it. Because it was too hard to moderate? Why not just leave it unmoderated? It would make AO a better place to talk about nice things.
You give the answer yourself. AO was reduced to kitty generation girl talk and fireside chat was reduced to one big insult to everybodies intelligence. The point must be to ensure a respectful debate culture about serious issues here at AO