Why has Ubuntu 18.04 moved back to insecure Xorg?

They are doing this because the next release is an LTS release, which means stability is the primary concern. Xorg has a good track record of stability, whereas Wayland is still (relatively) new. This decision is not permanent and does not mean Ubuntu has given up on using Wayland, just that it has delayed it. You can also opt to use Wayland instead of Xorg if you would like.

From Ubuntu Insights, the three primary reasons for using Xorg by default are:

  1. Screen sharing in software like WebRTC services, Google Hangouts, Skype, etc works well under Xorg.

  2. Remote Desktop control for example RDP & VNC works well under Xorg.

  3. Recoverability from Shell crashes is less dramatic under Xorg.

You will still be able to use Wayland and it is still pre-installed:

The Wayland session will still be available, pre-installed, for people to use, but for our ‘out of the box’ users the Ubuntu experience needs to be stable and provide the features they have come to expect and use in daily life and Xorg is the best choice here, at least for 18.04 LTS, but for 18.10 we will re-evaluate Wayland as the default.

@Forest's answer is helpful but I'd like to address the security perspective.

While there is a security risk, it's likely considered an acceptable risk, and possibly a feature, as mentioned in @BenCreasy's comment. It's clearly acceptable enough such that Xorg has been the default display server on many distributions for many years.

The primary concern seems to be that a process running as a user can log all keystrokes entered by the user from other processes, which may include passwords or other secrets. However, with a standard threat model, to get to the point where this could be used, you've already trusted and allowed the program to run as your user. It could do much nastier things than simply log keystrokes. Therefore, while an oversimplification, it's like saying "there's a security vulnerability in the system because running this malicious program gives me a virus".

However, this is not the best model, and is why Wayland attempts to solve the issue.

I am wondering why the developers left Wayland

At least on some computers some programs do not work properly (or even do not work at all) when using Wayland (while the programs work fine on Xorg):

Bug report #1731102 filed on Canonical's bug reporting site "launchpad.net" even describes that nearly all programs did not work correctly on the user's computer.

(I myself had similar experiences with Wayland however only some programs caused problems.)

Obviously for the developers of Ubuntu it is more important that Ubuntu works correctly on every computer than getting rid of a potential security risk (not knowing if the use of Wayland will introduce new security risks - of course).

the security risk of xorg

The security risk described in your link is also present in Microsoft Windows (up to Windows 7).

So maybe that security risk is not considered to be too critical.