It appears the power of energy-bending was intentionally forgotten. Since the elemental-bending abilities appear to be region specific, perhaps the same event that caused energy-bending to be forgotten, caused each region's particular ability among the people of that region.
There must have been a catalyst event that caused humans to abandon energy-bending nearly simultaneously because the Four Nations share both a history and a timeline, indicating they all developed their specialized bending (and subset abilities) at nearly the same time.
Energy-bending is the ability to bend life energy. It predates the four
main bending arts, as well as the arrival of the Avatar and the
formation of the Four Nations.
"In the era before the Avatar, we bent not the elements but the energy
within ourselves. To bend another's energy, your own spirit must be
unbendable or you will be corrupted and destroyed." — The lion turtle
teaching Aang about the nature of energybending in "Sozin's Comet,
Part 4: Avatar Aang". — The Avatar Wiki - Energy-bending
No one besides the lion turtle even remembered Energy-bending until he taught it to Aang. None of the incarnations of the Avatar remembered it either, since Aang was unable to discern a solution during the time before his final battle with the Firelord Ozai.
For such a formidable capability to be lost, it had to be dangerous or difficult. It was most likely both. If we assume that elemental bending was easier for humans to learn, then it make sense that the flamboyant and very effective forms of elemental bending would supplant the more dangerous and spiritually rigorous energy-bending.
Energy-bending is an extremely powerful and potentially dangerous
technique. If the bender's spirit is even slightly weak, or bendable,
then they will be infected by the spirit of the one they are bending.
As a result, the bender can be corrupted and even killed. — The Avatar Wiki - Energy-bending
Energy bending only seems to have two uses:
- Knowledge transfer
- Removal of the ability to bend an element
It makes sense there would be other abilities within energy-bending but whatever caused the ability to be intentionally lost, had to be something that was perpetuated by every nation. Perhaps the Order of the White Lotus knows more than they are sharing.
The Order of the White Lotus is an ancient and formerly secret society
that transcends the boundaries of the four nations, seeking
philosophy, beauty, and truth. They are devoted to the sharing of
ancient knowledge across national and political divides. The
Order's main purpose is to find each new Avatar, see to his or her
training, and provide protection. --The Avatar Wiki, The Order of the White Lotus
Emphasis is mine, implying perhaps the OWL knows why there is an Avatar at all, since they are one of the only organizations that predates the Four Nations and is tasked to find and protect the budding Avatar until their abilities mature.