Which integrated audio is it comparing to?
Let's use Realtek as an example, because they're a very common one. They have a variety of chips, ranging from the ALC231 to the ALC1150,
The ALC231 is rubbish. Four output channels (two stereo outputs), four input channels, and a 97dB SNR on output. But even that is probably enough for most users.
A good "middle-end" chip is the ALC861. That brings you up to 7.1 audio out, and a pile of sound-processing features (EAX, A3D, all that - including Creative's own standards). You still only have a 90dB SNR, but on a clean line that's tolerable. And it's cheap enough to be seen on sub-$150 motherboards.
Their top-end ALC1150 is basically the same, adding a few more output channels for some reason, a second ADC, and a 115dB SNR. That puts you above the low-end SoundBlasters, and within spitting distance of the high-end ones. On an integrated chipset. For anyone not doing professional audio work, that's probably enough. And you can find it on motherboards that cost less than this discrete card alone - sometimes even with advanced features like swappable op-amps.
It gets worse, because the main advantage of a discrete card is the SNR. Problem is, S/PDIF over TOSLINK is becoming a more common feature. And that means your computer's DAC doesn't matter - it's done on the sound system itself. Line noise isn't an issue, because it's fiber-optic. Every single Realtek chip I looked at supported this - probably not every implementation does, but it's something that doesn't cost the manufacturer any more than the cost of the connectors. That's another blow against them.
This isn't like video cards, where integrated can handle light users but any remotely intensive task requires at least a low-end discrete card. Probably not even one in a thousand users will need a discrete sound card - the ones who need more than the low-end integrated chips, like gamers, will be buying mobos that already have a higher-end audio chip.