It wasn't fully understood, but at the time they understood it well enough to make it work. It was lost because it was an extremely classified material that we had no use for for decades. By the time we needed it again, most of the original records had been lost and all previous engineers were long dead.

We knew what it was and roughly how it worked, but it was very much a process of re-inventing from scratch.

I think it's important to distinguish that what happened is they did not really understand why Fogbank worked, they just thought they did.

Consider fire. Or fluorescent lamps. Or radio. There's a trick, we don't really understand what's going on, yet there is clearly something here worth more investigation and gradually we get a better understanding.

A give away is often that there's perceived to be an "art" to making it work, and then once we understand properly the art dissolves, replaced by science. Making fudge without modern technology involves hard to learn judgement to get the right temperatures, but, today you can buy an accurate digital probe and use the recipe and that'll work reliably because it's just sugar chemistry, no art needed.

Cost does factor into it. They're never going to make more of those last gasp Walkmans, where the device is barely bigger than the tape and it has excellent sound quality and long battery life. Not because it's somehow lost technology but because it doesn't make economic sense any more. It's worse along so many dimensions at once than what we have today, and yet it'd be incredibly expensive, so it won't happen.