For the most part, it's not done that way because it's hella faster to send a digitally-marked-up manuscript, not to mention cheaper. As an editor, I've embraced this - life's easier if you don't have to wrangle pages, especially once a manuscript hits 300+ pages.

(I was one of the editors they test-drove early editing software on, at Berkley. Back then it was crap. These days they're quite good, be it track-changes in Word or some other program.)

I like getting digital markups, myself. It's easier to do the edits when it's all on the same screen/page.

As a writer, I am prone to printing out a draft and marking it up (I'm doing that today, in fact) but then I have to manually enter in all those changes, so it adds another step and uses more time/energy. Used only when I'm pretty sure there's something I need to see from another format, in order to catch/fix.