When did LEGO stop producing Technic action figures? I recently got interested in LEGO Technic again. The last set I own is maybe 15 years old, so my knowledge is a little bit outdated.
Back then some of the Technic sets had action figures included, like the (1990) 8830 Rally 6-Wheeler: 



And if I remember correctly they used seats for those figures in many Technic sets.
Both, seats and figures, seem to have disappeared from recent sets. 

When (and why) did LEGO discontinue making the LEGO Technic action figures?
The Technic minifigures last from 1986 to the year 2000. As far as I'm aware LEGO haven't released a statement on why the figures were removed. Minifigures are expensive and using them limits Technic sets to a certain scale. 

Having a dynamic sense of scale allowed Lego to create the £9.99 ($10.90) 8045 and the £61.65 ($89.99) 8295, two variations of the same model. One basic and affordable, the other focusing on realism.