I vaguely remember something about censorship, but I doubt it since it seems like that was isolated to North America. FFVI in Japan was actually a pretty adult game.

The official story is Nintendo did not want to evolve with CD's. Tons more storage and you practically print them for nothing. It was either Sega or Playstation at that point and I guess the stars just aligned with Playstation. Thank God it did because that was (IMO) the Golden Age of RPG's.