I think Biden was in it until the very end but realized the damage his own party was doing couldn't be overcome. He likely could have weathered this, rode things to the convention and locked it up but lost support of key Democrats, guys like Tester, who might even come out and say they aren't sure how they'd vote in November. At that point, it probably became clear that all the backstabbing by Democrats mortally wounded him and even if he did win the nomination, which he certainly would have had he stayed in the race, the party-inflicted damage would have been too difficult to overcome.
I think the campaign, and Biden himself, had hoped things would die down this weekend, especially with the Republican Convention coming to an end Thursday. But they didn't. And they realized it was likely going to be this way until the Democrats nominated him. Again, by that point, he'd be too wounded to take on Trump.
And I think that's what a lot of the donor class wanted. They either wanted Biden out or for congressional Democrats to do enough damage that he lost in November and they could say, "see, told you so!".
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