Space Fantasy, huh? All I can really think of is the hilarious oddness of Spelljammer, which was so fun but so silly if you thought about it.
My opinion: Quite simply, timing. Born in the mid to late 70s, I think my brothers and I are part of the first generation that grew up with a computer in our house. I still remember playing those first text-based dungeon crawls, where all you had was your imagination and lots of advice from people looking over your shoulder. Then the excitement of Might & Magic where you could actually see the halls as you walked down them, looking for gold and monsters. The rapid evolution where, eventually, I'd come home from a night out to find my brothers and their friends each nailed to a computer screen, headsets on, raiding dungeons in WoW. Now we live in an age where computing and special effects have advanced to such an extent that what we previously could only imagine can be displayed in high-def in games, movies, TV series, animation... It is no wonder that LitRPG has become so popular, as writers and readers are exploring the next possible step in making gaming even more real, with technology replacing magic as the tool needed to cross to other worlds.
Spelljammer was one of my all time favorites. I did a homebrew based on and some of the old pulp sci-fi I loved, doing away with some of the sillier stuff I didn't like (giffs, crystal spheres) where basically the solar system was just like in the pulps: every planet was habitable, there were monsters and alien humanoids on every one, and you could get from one to another within a reasonable amount of travel.
I theorize LitRPG might be so popular because it's essentially fanfic, but fanfic of games. Although it's popular to diss fanfic as the efforts of a bunch of weirdos, hornmone-crazed teenage girls (erotic friend fiction!) and dullards who aren't creative enough to come up with their own stories, I'm of the opinion that fanfic is valuable in that it lets the little the regular folks take control of their entertainment rather than passively accepting what the mass media has decided is profitable enough to hand us. Fanfic is bad and weird sometimes, but so are everything from indie films to homemade knitted sweaters, and they all represent someone's time, effort, creativity, and dissatisfaction with what's available on the market. You might not want to read that self-insert Harry Potter meets One Direction erotica, or wear that itchy, oddly-fitting sweater with purple kittens all over it, but someone does (even if it's just the author), and it represents a niche that they'd never have been able to get at the local Books a Million. LitRPG in general seems to be fanfiction of a genre rather than of a specific work, and it's interesting because there's such a HUGE amount of games made by small developers that you think everything would be covered, but nope. It's akin to watching people play games on youtube (something I've never understood the appeal of) in some ways, and maybe to some it's a way to get out an idea we love that we just don't have the time or programming chops to bring to life.
Going off on a tangent...I don't know about others, but, I'll check out Youtube viddies to get look at a game I'm on the fence about, to see if I'm really interested. For some of the more complex sandbox games, considering the learning curve and lack of documentation, it is a good way to pick up some idea of mechanics of specific things. My latest sandbox addiction is Rimworld, but, I'm also partial to Starbound and Ark. I'm also a fan of turn-based empire building games, so Endless Legend, Civilization and the classic Master of Magic are all on the table. The popularity of litRPG and GamerLit really isn't too big a surprise. Gaming is an active form of entertainment, really on a par with most forms of sports. Reading is also a more active form of entertainment while watching the telly is more passive. This isn't to say video versions will be bad, I think it's more the active portions that are what is raising the passion.
I loved Spelljammer as well. Part of the fun was just how crazy everything was. Hippo furries with gun love. Giant Space Hamsters. etc. etc. It was always a wild ride.
