It split into two.

The “very small scale structure manufacturing” part is alive and kicking. You are holding about a trillion perfect nanoscale devices in the palm of your hand right now.

The “we will make tiny robots that live in your body and fix you” club was always selling snake oil-and they knew it. The technology they were pushing just does not work at atmosphere temperature and pressure and immersed in oxidizing not quite neutral pH fluid.

Thankfully, there a much better way to make tiny machines that live in your body. That’s making/adapting/causing others to make proteins that do what you need them to do. Proteins are essentially bio-robots that can manipulate their surrounding by changes in their folds (conformation), for example by exposing binding sites in reaction to something binding to another binding site.

TLDR: nanotech is one of the largest industries in the planet. A lot of promises were made by idiots in the nineties, but biotech, another huge industry, has picked up the slack very well.