Because they -blam!-ed up the netcode by only implementing P2P because it's cheaper. They reduced the number of players to 8, so they have less network trafic between consoles. Makes it look work better in a number of cases. It's all about saving face without doing anything and generating profit without investment.
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Not true, although that was the case in D1. In D2 you're always on a bungie server, however they can't call it dedicated because shot registry and physics is client side. It's why the game feels smooth even when you're lagging.
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I would rather call it asynchronus behaviour than smooth. P2P just sucks and is the inferior MP technology.