What happened was that the silly people who wrote that twaddle managed to forget (somehow) that the millions of miles of fiber optics and copper cabling, the millions of processors that go into servers and backbone routers, the thousands of satellites and microwave links, and so forth are all possible only because of the "Industrial World" and all the uncounted thousands of acres of land on which that infrastructure rests and the businesses that run them are under the jurisdiction of "Governments".

There never was and can never be a cyberspace independent of the physical world. All there was was a brief moment of being ignored until the powers that be realized "Oh, hmm, looks like that Internet thingamajig is kind of important now; better start ruling it."