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Without spending a lot of time digging into it, I don't think that the pandemic was a major enabling factor.
Like, work on hardware-driven larger neural nets and generation of images had been going on pre-pandemic. I remember articles about Google researchers working on them quite some time back.
searches
https://en.wikipedia.org/wiki/DeepDream
https://research.google/blog/inceptionism-going-deeper-into-neural-networks/
Like, if you've used a diffusion model like Stable Diffusion and run low-iteration stuff in Automatic1111 or ComfyUI or something, that looks pretty familiar.
And that was being released in 2015, half a decade before the pandemic started, and was based on pre-existing work.
I think that the "why now" question mostly just has to do with hardware reaching the point where you can do some significantly-more-interesting things with neural nets, coupled with some mostly-iterative software improvements.
I don't think that it was a "people are staying inside due to the pandemic and that drove a lot of change" in the sort of sense that, say, there was an impact on video game sales, something that I was talking about on here recently.
EDIT: If you want another data point, I was writing neural-net-based image enhancement software in the early 2000s. Far smaller neural nets than what people are using today for generative AI stuff, but...shrugs
And while I was writing code for CPUs, I distinctly remember a buddy of mine at the time who focused on parallel scientific computing
though he wasn't working on neural nets
talking about using GPUs to do scientific computation back then, so I know off-the-cuff that there were definitely people banging on that in that timeframe. That's over twenty years back, and those two things are the fundamental elements behind genAI image stuff.
I used to search out deep dream content for my backgrounds. At the time, I was interested in it because of the psychedelic effects it could create.