This is an interesting question. Here’s the short version of my conjecture.
The Appalachian region was settled largely by Ulster Scots and Border Scots from the Marches during the great migration from around 1720 to 1770 following the Acts of Union of 1706-7, as these marginalized populations came under increasing political and economic pressure. Being unwelcome in the already settled coastal and tidewater colonies, they pushed south into Appalachia mostly through Chesapeake region ports.
During this time, piping traditions throughout Great Britain were experiencing a period of decline in favor of the fiddle - the truly hot instrument of the 18th century in terms of popularity, availability, affordability, and portability. The settlers’ music reflected this prevailing context, reinforced by availability of cheap instruments in trade with piedmont and lowland areas of the American South, populated largely by immigrants from southern England and East Anglia where piping traditions were weak but fiddles were popular.
In this period, the baroque flute (or flageolet) was confined to the drawing room as an expensive, genteel and quiet instrument, less readily available, and with insufficient power to be seen as an attractive solo instrument for driving dance music. The era of cheap simple system flutes following the Boehm explosion of the late 19th century was still a hundred years away. And cheap mass produced tin whistles awaited the arrival of industrialization and the availability of rolled metals around the same time.
Fifing was confined mainly to an organized military context with weak influence in Appalachia. Reed flutes and whistles must have existed in Appalachian folkways, but more as children’s toys and personal amusements than for dance music; and perhaps as a stronger tradition among African-American populations than in white Appalachia, if survivals of folk wind playing in the South (e.g. Otha Turner) and the Caribbean are any indication.
These factors strongly favored the fiddle as the dominant instrument in autonomous Appalachian trad. The 19th century addition of banjo as an accretion from minstrel pop music completed the picture. By the time of the mid 19th century resurgence of piping in Scotland, the Borders, and Northumbria, the isolation of Appalachia from even other American traditions had cut off that avenue of influence.
Notably, fluting and whistling never gained or re-gained a strong footing in Scottish music either. To the extent that flutes and whistles are fairly common in Scottish trad today, it’s largely a back-influence from the Irish and pan-Celtic revivals of recent years. And areas such as the Scottish Northeast remain strongly fiddle-centric. Whether the subtle bias against wind playing is due to historical accident, or the dominance of GHB and its unfriendliness to co-existence with other winds, or to some deeper underlying aesthetic animus toward winds, remains an open question.
