Adaptibility, cost, space and heat, power consumption, and repairability.
Of the 3 desktop computers in the house (of the same age range, with similar processors) only mine is used as a gaming/photo editor PC. The other 2 dont need 8-16GB of RAM, they do well with around 4 GB but if the mother in law wanted to do photo editing on her PC I could add more RAM to smooth things over. If AMD and Intel were to include RAM on the processor then for every processor that exists now in each line there would have to be 2-6 other processor part numbers with the same basic chip and different amounts of RAM (4,6,8,12,16, etc) which increases production costs. Also remember a processor Die is a very small thingin the grand scheme of things and the more we add into that tight space the hotter it gets and the more wattage will be required. Circuits dont like heat. Finally the repairability, would you buy a new $300 processor if the RAM went bad or would you buy/build a whole new PC? Why replace 2 items when only one breaks.
That said there is a finite amount of memory on the Processor itself, it exists in the caches (L1,L2,L3) but it's only so much