Weather has hyperlocal precipitation alerts.

I don't believe Weather or Dark Sky have had hyperlocal weather forecasting. I would absolutely love such a feature (since I live far from the center of town in an area with microclimates); I would say both were equivalently faulty on my weather forecasts.

Assuming this is true, why did it happen? Presumably Apple is using the same data feeds and backend as Dark Sky? Or are they missing something?

I don't think that's a safe assumption. The effect was immediate and noticeable. I've seen other posts in this thread after I said this that suggested this was a cost savings measure.

From using the Apple Weather app, I didn’t get the feeling that Apple Weather actually adopted much of the guts of Dark Sky, even though Apple promised to do so.