What happened to S3 suspend?

Nothing. But many devices today do not support it anymore, instead they support S2Idle. S2Idle is more power-efficient than running-idle but less efficient than even Standby. Its huge advantage is waking up virtually immediately.

Linux has no problems running S2Idle but due to how S2Idle works, more components can wake up your system, therefore more components can misbehave, incl. devices attached by USB. Ugh.

Having my laptop wake up when it's in my bag (and the exhaust vents are blocked) is the last thing I want.

S2idle is also effectively how all smart phones and watches work. Note that not every wake up results in the same results though. Your phone wakes up all the time, but it doesn't necessarily do a lot of work when it wakes up. The same can be true for your laptop. It would be unlikely for it to wake up to the point where it needs active cooling. If it does the OS is doing something wrong.

Microsoft sabotaged it.