Why didn’t Modern Greek unify all the ancient Greek dialects? See my comment.

The answer is Niko Vasileas’ answer.

I’ll add that koineisation, the merger of dialects into a new norm, happens a lot. Australian English is a dialect koine, for example, and so is the contemporary dialect of London, and so is Early Modern English.

They do tend to have a dominant dialect as their basis, typically for reasons of prestige rather than geography; Early Modern English, for example, owes more to the dialects of the East Midlands than London itself, because the tradespeople from there were prestigious. They also don’t seek to represent all candidate dialects equally. In the case of the Ancient Greek Koine, Aeolic and Arcado-Cypriot would have been way too archaic and obscure to fit in to any dialect koine; and as it turns out, they didn’t.