The state legislature is gradually remembering their powers, which include simply dissolving general law cities with a majority vote. But mostly the state is just suing them and using funding powers to coerce them.

It seems unlikely everyone in Sacramento forgot about the differences between types of municipalities, at any point in time.

Eh, actually I think you'd find if you were to become involved in state-level legislation that the elected members themselves have no idea. They are also largely unaware of the powers or even the existence of local agency formation commissions. Some of them have staffers who know the deal, some don't.